August 18, 2006

Increased demand leading to stronger cattle prices

US cattle producers are looking forward to higher prices now that the Japanese market has re-opened and domestic demand is on the rise.

Market-ready cattle prices also are increasing while the feeder cattle calf market remains high.

Prices are now climbing slowly into the winter, Rich Nelson, director of research at Allendale Inc said. However, Nelson warned that four consecutive years of profits may end after 2007. Prices would begin to decline next year but profitability would still be maintained, he said. 

Feedlot placements for July were up 18 percent from July 2005. Since May, monthly cattle marketings have exceeded year-ago levels.

Fed cattle producers would be experiencing lower prices starting in the fall of 2007 all the way until 2011.

Joel Brinkmeyer, executive vice president of the Iowa Cattlemen's Association, said prices of feeder calf prices are up and demand has increased, especially for that of high-quality beef.

Brinkmeyer said the most important factor now that demand remains strong as producers continue to grow their herds over the next several years.