KSU economist: With more meat on the market, trade matters

Mound Valley field day features beef outlook

 

by Raney Rapp, Farm Talk Newspaper

May 16, 2017

 

The current climate of United States cattle markets can be summed up in one word — expansion. More calves are hitting the ground, more meat is in the market, and factors surrounding expansion come with their own set of unique challenges.

 

At the annual Beef Cattle and Forage Crops field day in Mound Valley, keynote speaker and Kansas State University agricultural economist Glynn Tonsor shared his perspectives on this year’s beef cattle markets and his reflections on previous years.

 

Strong meat demand and by historic standards, tight supplies brought on fast and favorable changes for cattle producers in 2014.  The “stars aligned” in 2014 in a way that has not happened in many years, Tonsor said, and we are still feeling the effects today.

 

The price surges and low cattle numbers of 2014 weren’t just a cattle story, Tonsor said. The year changed the future for every protein.

 

“When all the major proteins pulled the trigger on expansion at the same time, the net of that is more meat in the system, and quite a bit more per person,” Tonsor said. “Not necessarily a bad thing but it is more pounds that have to find a home.”

 

With more meat, not just beef, in the system, consumers begin to make more impactful decisions about their protein preferences. The idea of consumer demand for beef is not an easy topic to deal with, but it has to be addressed to fully understand current market dynamics, Tonsor said.

 

“Most of us are comfortable with supply concepts like how many cattle there are in this country, and we have a lot of information on that topic,” Tonsor said. “But frankly, supply is only half of the story. It’s not enough just to talk about the quantity of calves this year, I have to also tell you something about the public’s view of beef.”

 

While the public may be inclined to consume more of all proteins because of their availability, they will only do so at a lower price point than they have previously, Tonsor said. Those decisions will likely directly impact cattle prices for the next 8 to 10 years, the typical length of an expansion cycle.

 

“The point is: trade matters,” Tonsor said...

 

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