The factors that put rocket fuel underneath the cattle market in 2011 will continue into 2012, and that means prices for all classes of cattle still have some upside, according to Kevin Good, CattleFax analyst.

Speaking at the annual CatleFax Outlook session at last week’s Cattle Industry Convention in Nashville, TN, Good reaffirmed what many in the audience already thought – the outlook for 2012 cattle prices is extremely bullish.

How bullish? “We’re going to suggest calf prices this year increase another 15%,” he says.

In fact, CattleFax is calling for better prices for all classes of cattle. Looking at the fed cattle market, Good is calling for an annual average in 2012 around $122/cwt.

But with that price forecast is a lot of risk, he cautions. “If you go back and look at a long-term average, we typically have a 21% move in the market from the absolute low on a weekly basis to an absolute high. Put that on a $122 market, and that would suggest you’ve got risk at some point back around $110 and potential to the mid $130s.”

Doing the math, he says that means a $300/head spread on a fed steer. That’s more exposure in terms of risk than cattle feeders have ever seen, he says, meaning risk management and agile marketing will be essential going forward.

For yearlings, Good is calling for an annual average this year around $150/cwt. for a 750-lb. steer. “That’s about 15% above a year ago,” he explains. For calves, he’s predicting prices in the $175 range for an annual average.

“Put $150 on yearlings as an annual average, that means we could have prices in the mid-$130s to prices as high as the mid $160s,” he says. Looking at the back end of the futures board, he says the market is already beginning to price some of those fundamentals into the mix.

Looking at bred cow values, he says there’s room for upside movement there as well. While bred cow values are hard to pin down, he looks for a 25% increase this year, bringing average bred cow values somewhere around $1,500 or higher.

But that’s an annual average. “We recognize the top end will approach $2,000.” Using the old rule of thumb that a bred cow should sell for twice the value of her calf, $1.75 for a five-weight calf rings up around a $1,000 bill of sale. “That gets you to $2,000 on the top end pretty easy,” he says.

Risk for cattle feeders and stockers will increase this year, he predicts. “The bottom line for the cow-calf producer is he’s in the driver’s seat this year and probably for a number of years to come. Look for extremely strong calf values to continue, more than offsetting increased input costs, recognizing that those in the drought area with high hay values will continue to have a challenge if Mother Nature doesn’t cooperate.”