The situation for cattle producers is outstanding, University of Missouri Extension agricultural economist Ron Plain said last week during the University's 2014 Summer AgMarketing Outlook Conference.
"We have record cattle prices by big margins," Plain says. "Each of the last four months have set new records and you can see a very strong upward trend."
The number of cattle slaughtered is 5.7% lower than last year. Plain says the drop in cow and heifer slaughter has tightened up the beef supply, driving up prices. With high feeder cattle prices and good pastures, producers are now looking to increase the breeding herd, which eventually will bring prices down.
"The more cows we keep on the farm and the more heifers we save for breeding, the faster we will turn this cattle cycle," Plain says. "But we are talking about cattle. It takes a long time to change the breeding herd and turn that into more calves and more slaughter."
Estimated net return on cow-calf production is $350. Plain says it is an outstanding time to own cattle and expects that to last for some time.
Meanwhile, the cost of hog production has dropped as the price of corn has come down. Plain says breakeven on a live-weight basis in June was $56 per hundredweight. With record corn production expected, breakeven prices could move lower.
Like beef, pork retail prices have been setting new records for the past several months, breaking $4 per pound on average in May.
Slaughter numbers for hogs will also be lower. Plain says the driving factor is porcine epidemic diarrhea virus, which has killed around 7 million pigs.
Plain says profitability has been very good in 2014 and he expects more than $100 per head profit in July and August. Based on the futures market for corn, bean meal and hogs, Plain says hogs should be profitable each month through the end of 2015.