Executive Summary
Beef Exports Create Tremendous Opportunity
By Mark Anderson, NALF executive director
Cattle prices have been surprisingly
strong through the 4th quarter of 2017
despite increases in beef production
throughout the year and larger cattle-
on-feed numbers. United States
beef production will be up close to 4
percent in 2017 which is substantial
while absorbing larger cow slaughter
and larger cattle-on-feed numbers as
we begin the new year. How has the
market been able to absorb these kind
of numbers and production increases
given current supply? The answer is
rather encouraging for beef producers.
Increasing demand domestically and
substantially larger export business is
helping to absorb the larger supply of
cattle and help maintain price levels.
It is estimated that beef exports will
have increased 12-13 percent over 2017.
That percentage increase is substantial
given the current increase in United
States beef production. This in-turn
has helped commercial feeder and fed
cattle markets maintain price stability
as we head into 2018. It is estimated
that exports add nearly $300 per
head to the value of fed cattle prices.
Additionally, one cannot overlook the
stronger U.S. economy during the past
12 months with over 3 percent growth
in GDP along with lower unemployment
rates. As unemployment declines, most
additional income dollars are spent on
food throughout the U.S. which has
no doubt helped to improve domestic
demand and retail beef prices.
Incredibly, in spite of beef production
increasing nearly 4 percent, which also
includes a 7 percent increase in cow
slaughter, it appears that retail beef
prices will end the year around $5.65/lb.
At the time of this writing, the November
2017 all-fresh retail beef price was at
8 | FEBRUARY 2018
$5.64/lb. versus $5.59/lb. a year ago in
populations that are developing a
2016. The combination of exports along
taste for U.S. beef, the opportunities
with an improved domestic economy
are tremendous. We are already seeing
and decreasing unemployment have
expansion of natural market ventures
all been factors that have sustained
here in the U.S. to supply high-end
fed and feeder cattle prices at higher
middle cut production that will be
levels than expected
marketed to upper-end
given current
price consumers. As
production levels.
markets expand into
We are already seeing
general populations,
expansion of natural
This will have to
the growth potential
market ventures here
continue through
is rather astonishing.
in
the
U.S.
to
supply
2018 to have a
high-end middle cut
chance at sustaining
Think back over the last
current price levels.
40 years and look at what
production that will
Retail beef prices
the U.S. cattle producer
be marketed to upper-
will most likely
has done with a smaller
end price consumers.
decline in 2018
cattle herd yet has
As
markets
expand
into
given continued
maintained increasing
levels of increasing
beef production
general populations, the
beef production that
levels through
growth potential is rather
are projected for
improved genetics,
astonishing.
this year. Continued
production practices
improvement in beef
and technology.
trade overseas will
Carcass weights have
remain key in sustaining cattle market
continued to increase on U.S. fed
prices in 2018, along with sustaining
cattle along with cattle that also have
economic growth in the United States.
improved quality and yield grade
The current administration’s policy
when fed to their correct slaughter
toward deregulation and tax reductions
end-point. Since the late 1990’s, many
to both small and large business entities
beef processing plants have seen their
conducive to job growth and a growing
average percentage choice & prime
economy which can all be supportive
increase from the low to mid 60 percent
to the United States Beef Industry.
level