With summer just around the corner, many ranchers are starting to contract their calves. But, the big question remains. Just what will the short and long term outlook for the cattle market be? Dr. Gary Brester of MSU's College of Agriculture shares with us an outlook.
A portion of the interview with Northern Ag Network's Lane Nordlund:
Dr. Gary Brester: The questions becomes how long will those high prices last. You have to go back in time, and we see that we have seen these prices before in today's dollars in three other years: in 1951, 1973 and 1979. Each one of those events was caused by low cattle numbers, Korean war and the concern for a shortage of food. We ended up with cattle prices below the long run average two years later, and that long run average is some where around a $1.50 calf. 1973 same thing–lots of commodities bid high in '72. Then 2 years latter same drop as a result of OPEC quadrupling the prices of oil. Then in 1979 same things happened low numbers, OPEC raises oil value, incomes fell and cattle prices fell out of bed. Why the long story? Well if history repeats itself we would expect to see the cattle markets to fall and lower prices in 2016. But the questions is the demand side of things. It wont be oil. Could it be others things, perhaps but I don't think so. I also don't think we will see a big enough increases in cattle numbers and supplies to cause lower prices, substantially lower prices either. Probably a little bit, but not substantially.
© Northern Ag Network 2015