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Expect Higher Cattle Prices in 2015 -- Economist

A 19-year trend of fewer calves coming to an end. Tight cattle numbers and high prices are driving producers to hold on to quality heifers and cows to rebuild their herds. Female slaughter dropped 10 percent in 2014.

“We are saving more heifers and cows for breeding, but it’s a slow process – nine months from breeding to birth and another two years before those calve reach slaughter weight,” says Ron Plain, University of Missouri Extension agricultural economist. “So yes, more beef is coming in 2017 and 2018, but for the time being tight supplies and high prices will continue.”

The week of January 16, cattle slaughter totaled 546,000 head, up 1.5% from the week before, but it was down 9.2% from the same week last year.

This is great news for the thriving cattle market, which has been hit hard in recent years. It will take a few years for herds to be built back up, so expect supplies to remain tight. However, producers are responding to the higher demand by holding cattle a bit longer to boost slaughter weights.

"The average steer dressed weight for the week ending on January 3 was 897 pounds, unchanged from the week before and up 21 pounds compared to the same week last year," explains Plain in a report.

Higher demand is not just in the U.S. Global demand for protein is on the rise, reflecting in growing export numbers.

“Year-over-year domestic meat demand was up 7.3% in November. This was the 10th consecutive positive month for meat demand,” says Plain. “Domestic beef demand was up 11.2% in November and is up an average of 4.2% over the last 12 months. Export demand for beef was up 6% in November and has been above the year-ago level each month since April 2013.”

All-in-all, we expect to see cattle prices in 2015 to average higher than 2014, says Plain.

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