Special Report

CattleFax predicts record prices in ’11 and ’12

As usual, there was a big crowd on hand for the CattleFax Outlook Seminar in Denver on Friday—and, for the most part, the news was very positive.   Bottom line—CattleFax predicts strong cattle prices will continue into the foreseeable future, with prices on all classes of cattle at record high levels in 2011 and 2012.  In his closing remarks, CattleFax CEO Randy Blach summarized the various presentations made by CattleFax analysts.

AUDIO: Randy Blach (13 min MP3)

Points to Ponder (from  the CattleFax Outlook 2011 Executive Summary)

• Global beef supplies decline and global beef demand rebounds.  Many global economies are recovering much quicker than the U.S.
• Expanded market access to Japan and reopening China to U.S. beef exports would be very supportive to wholesale beef and cattle values.
• U.S. consumers will eat less beef at higher prices for at least the next three to four years.
• Calf prices will get to high enough price levels for herd expansion to kick in.  This will happen during the next one to two years.  Stocker operators need to be prepared for profit margins to narrow significantly during 2012-14.
• Ethanol production will use nearly 40 percent of U.S. corn production during 2011-12.  Whether or not you love it or hate it, this topic will be on the front burner the next two years as global demand for grains exceeds supply.
• Farm and ranch land values are poised to increase significantly during the next two to three years.  Gross incomes for farming and livestock operations will be record high.
• Costs will also increase!  Managing for a solid margin will be critical.  The market is expected to be more volatile and extreme during the next few years than any time in history.
• It is going to take a pile of money to operate in the years ahead.  Many operations may be forced out of business because of lack of access to necessary credit.
• It is going to be volatile–have a plan and be disciplined.  In this environment it will be very easy to be wrong. “Bet not thy whole wad!”
• Prices on all classes of cattle will be record high in 2011 and 2012.