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Peel Analyzes Supply & Demand Of Cattle Market

The first quarter of 2015 is almost behind us and it appears cattle prices have stabilized quite a bit lately after some wild swings in late 2014. Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel said beef demand has been limited this winter.

“That’s causing some of the squeeze in the market right now,” Peel said. “Boxed beef prices have been pretty stable over the last month or so. As have fed cattle prices, at the same time feeder cattle prices some increased a little bit.”

Right now there are competing forces. Peel said tight beef supplies continue to support cattle prices, but there is also increasing supplies of pork and poultry that are weighing on the market. He said that makes it hard for boxed beef wholesale and retail values to continue to move up, as they need to relative to the supply situation on the beef side.

Obviously, supplies are tight right now. One of the reasons for the tightness is the aggressive rebuilding of the U.S. mamma cow herd, including in the Southern Great Plains. Peel said Oklahoma has seen a pretty remarkable recovery from the drought liquidation with two consecutive years with about a six percent increase. Texas added about seven percent more cattle last year, while New Mexico hasn’t begun to grow because it remains fairly dry.

“The bottom-line is we have recovered some over the last couple of years. “We’ve got about a million head more cattle needed in Texas, Oklahoma and New Mexico to be at the level we were at the beginning of 2011. So we’ve still have a long way to go to fully recover from the drought liquidation.”

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