After peaking in 2014, cattle prices have fallen sharply and could sink even lower in 2017.
The record high prices in 2014 were driven by a low number of cattle following droughts and die-offs.
“Probably a lot of ranchers aren’t going to see those prices again in their lifetime,” farm and ranch consultant Bob Bragg said.
At the peak of the beef market in 2014, ranchers were selling calves for $1,200 to $1,500, Bragg said. But those prices have dropped steeply, and an economic forecast by the University of Colorado Boulder predicts prices will fall more next year.
The average prices for steers and heifers in 2016 was $123 for every hundred pounds the animal weighed. The 2017 season average price for steers and heifers is forecast at $117 for every hundred pounds, the lowest since 2010, according to the report.
The fall in prices started sooner than many ranchers expected in mid-2015.
“Most ranchers didn’t even factor in that prices could fall as much as they have over the last two years,” Bragg said.
Wayne Semler, president of the La Plata- Archuleta Cattlemen’s Association, agreed the fall in prices has been tough for locals because no one was predicting it would happen.
“Sometimes it’s a day-to-day challenge,” he said of current market conditions.
The cattle herds were built up faster than expected, and the beef industry has faced strong price competition from chicken and pork, Bragg said.
In August, the U.S. opened up to imports of raw beef from Brazil, one of the largest beef producers in the world, which could drive down prices more, he said. Brazilian beef imports had been banned previously.
Now is the time for ranchers to begin cutting costs, if they haven’t already, Bragg said.
While the price for cattle is down, the prices of feed and fuel have also fallen, which has been positive, said Semler, who raises calves for sale.
But it has the potential to hurt those raising alfalfa in addition to cattle.
Even though the price of cattle has fallen, the cost of meat at the supermarket has not seen the same reduction.
This is likely the case because, while cattle prices were high, feed lots had trouble making a profit.
Now the herds have higher numbers and feedlots are hesitant to pay higher prices, Bragg said.
In addition, the companies running slaughterhouses seem to be doing well despite the downturn, he said.
One solution for ranchers could be selling more beef directly to the consumer.
“We got to do something to try and retain some of that profit that’s out there,” he said.
But direct marketing is challenging because cattle producers need to have the room to raise most of their herd to adulthood, Semler said.
In addition, there are individual producers with hundreds of cattle in the county and it seems unlikely there is enough local demand for all of that beef, he said.
mshinn@durangoherald.com
