Cattle markets on rise in 2017
May is National Beef Month, and despite low market prices in recent years, cattle producers can look forward to more favorable conditions in the months to come.
According to Matthew Diersen, SDSU Extension Risk/Business Management Specialist, cattle futures are looking promising even after facing downward trends over the last two years.
"At (this) very moment, the markets are at very good price levels for sellers," Diersen said. "Over the last quarter or over the the last three months there's been a very large increase in both cash prices and futures prices."
Diersen said this increase would allow producers to sell their cattle at higher prices than expected, and the possibilities for a more profitable market going forward are much better than they have been in recent months.
Considering current cattle numbers and the projected costs, returns on cattle are expected to be at a slightly better level than last year. Lower costs and a higher return on calf prices should mean a better profit outlook in 2017.
According to Diersen, the price drops over the last year can be attributed to unusually low calf prices last fall relative to the supply of cattle, as well as an increase in poultry and pork production as those commodities rebounded.
A better return at current prices will contribute to a more stable future for the cattle market, but producers should not expect much more of an increase in prices, Diersen said.
"From the prices we're at now it's tough to give you too many factors that would give you much higher prices from where they're at," Diersen said. "It would take feed prices to stay low and probably a little more of an increase in demand on the beef side to carry over."
Tracy Johnson, a beef producer who farms south of Estelline, said he's made a lot of changes to his operation in an effort to minimize costs and increase efficiency.
"We looked at other options as far as what we have been doing with our cattle," Johnson said.
Johnson also does custom cattle feeding for Redstone Feeders, a venture he began 10 years ago as a way to increase profits and supplement the cow-calf operation.
Like many cattle producers, Johnson is still optimistic about the future of his business and knows that market conditions, for better or worse, don't last forever.
"In the cattle business it's always been kind of a rollercoaster," Johnson said. "You've got your good years and your bad years. It's a rewarding life, but you've got to take the good with the bad."
South Dakota Secretary of Agriculture Mike Jaspers agreed that market conditions are favorable for higher profits, but said that the best thing for the market would be to remain steady rather than show the remarkably high prices producers experienced three years ago.
"I would love to just see the good sustainable numbers like we're starting to see here now," Jaspers said.
Jaspers said that the rise in cattle prices may have also come from a hopeful look at U.S. trade agreements with Asia as the interest in American beef grows.
"The spike in cattle prices recently had to do with optimism on trade with China and Japan and the Asian countries where we may be able to negotiate more open trade deals," Jaspers said. "If we're able to open up that market and we can go into those areas where they've gotten a taste of American beef, and just like the rest of us, we keep eating it because it's good stuff."
As one of the first fundamental industries in the U.S., the beef industry has a special place in South Dakota's economy and in the hearts and minds of those who work in it. May Beef Month showcases South Dakota cattle producers and others who are directly involved in the industry.
"Not to take away from any other line of work or any other sector of the ag industry, there's hardly anyone who is more dedicated than a cow-calf guy during calving season," Jaspers said. "This is a way to showcase those things and tell the public how important our way of life is and how much we care about the animals we produce and how much we care about their well-being."