USDA: Cattle prices to rise in early 2018 fueled by strong demand
In the fourth quarter of 2017, USDA expects the fed cattle prices o be average above last year due to a strong demand for beef and continued firm packer margins.
According to analysts at USDA, for most of 2017, market demand has pulled cattle through U.S. feedlots at a rapid pace, which has likely kept dressed weights lower than last year and limited the number of cattle in feedlots over 150 days. At present, packers may be forced to bid up prices because feedlots do not have an incentive to sell below their breakeven prices, in light of low feed costs and high futures prices for December and February.
USDA has raised the forecast for fed steer prices for the fourth quarter of 2017 to $117.00-$121.00 per hundredweight (cwt). Furthermore, the forecast for next year's forecast was also raised to $116.00-$124.00/cwt.
"The price forecast for medium frame No.1 feeder steers 750-800 pounds was raised to $155.00-$159.00/cwt for the fourth quarter of 2017. The forecast for 2018 feeder steers was also raised to $144.00-$152.00/cwt in the first quarter and $143.00-153.00/cwt in the second quarter," USDA's report read.
U.S. Beef Imports Raised for 2017
Beef imports were up 5 percent in September from a year earlier to 231 million pounds. Among the major sources of imported beef, increased imports from Australia (+20.2 million lbs) and Mexico (+4.2 million lbs) more than offset declines from Brazil (-10.4 million lbs) and Uruguay (-2.3 million lbs). As a result, imports during third-quarter 2017 were 8.4 percent (+63 million lbs.) higher than third-quarter 2016. The forecast for fourth-quarter 2017 imports was raised by 10 million lbs from last month based on sustained demand for lean meat in the United States and increased imports from Mexico.The forecast for 2018 beef imports was unchanged from last month.
U.S. Beef Export Demand Strength Continues
In September, U.S. beef exports reached 243 million pounds, a 14-percent jump year over year, largely due to elevated shipments to Japan (+20.9 million lbs). As a result, thirdquarter 2017 exports were up 13 percent (+85.4 million lbs.) from last year to 746 million lbs. Based on the current pace of export growth, seasonal fourth-quarter export patterns, and stronger weekly export sales data (https://apps.fas.usda.gov/esrquery/) in October, the U.S. beef export forecast for fourth-quarter 2017 was raised by 30 million lbs from last month. Higher domestic production, lower prices, and stronger demand in overseas markets are likely to continue the competitiveness of U.S. beef for the rest of 2017 and through 2018. The forecast for 2018 beef exports was raised slightly to 2.9 billion lbs.
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