Fed-cattle prices have likely seen their top for the spring. But feeder prices, although a little lower than in early May, may rebound to the stout levels that kept margins strong for stocker operators, says Duane Lenz, CattleFax manager of operations.
Lenz spoke last Friday at the Panhandle Grain & Feed Association 95th annual meeting in Amarillo, TX. Before his address, Lenz told BEEF that along with the cattle price forecasts, CattleFax projects corn prices to drop back to seasonal form at harvest time.
“With the prospective plantings we’ve seen, we’re projecting corn prices in the $5.50-$5.60/bu. range this fall if we get the crop planted on time,” Lenz says.
“For fed cattle, we think the spring highs at above $120/cwt. have been made. We look for a 12-14% break in prices and summer lows in the $106-108 range,” he says.
“For feeders, we think they’ll fall back a little (from the mid-$130/cwt. levels this spring) – but not very much lower.
“Feeder cattle have been really resilient. Over time, as supplies start to tighten up more, they may start to rally again.”
CattleFax has forecast a slow rebuilding of the beef herd, and dry weather across much of the Southern Plains is thwarting any plans many ranchers might have in holding back replacement heifers.
“You can just look out here and see a major problem we’re having in rebuilding the herd,” he says, describing drought conditions across the Texas Panhandle and West Texas. That, along with high calf prices, will keep pressure on producers to market their heifer calves, Lenz adds.
Lenz expects a continued rebound of U.S. beef exports. Though export numbers are “slowing down some,” he expects they could end up 15-20% over 2010 by the end of the year. “They could approach record levels in the area of $3 billion (in sales), which is higher than pre-BSE levels (before December 2003).”
Lenz says a reduction in U.S. beef imports, down 15-18%, is impacting net beef trade. “We’re exporting more than we’re importing for the first time in a long time,” he says.