WEST LAFAYETTE, Ind. — Purdue University experts predict a changing
environment for cattle and hog farmers, including higher futures prices and
lower feed costs.
Jim Mintert, director of Purdue’s Center for Commercial
Agriculture, recently led a webinar on beef and pork industry profits.
“The all-time inventory for beef took place back in the
mid-’70s, and we have now declined rather precipitously since that level,” he
“This year’s inventory (is) at 87.7 million head — that’s
roughly 2 percent smaller than a year earlier and 9 percent smaller than the
most recent peak in inventory, which was back in January of 2006. It’s also the
smallest cattle herd inventory since the early 1950s.”
As herd size goes down, inventory of beef cows also is
expected to decline. Jan. 1 inventory was at 29 million head and is expected to
Reductions in herd size and the size of beef cattle
inventory are leading to much smaller slaughter levels, Mintert said.
Slaughter levels were around 32.5 million head last year.
The number is expected to go to a little more than 30 million in 2014 and around
20 million head in 2015.
“If you look at 2015 projections relative to 2013, there’s a
decline of about 10 percent in cattle slaughter,” the director said. “The
smaller levels are giving us smaller beef production.”
Smaller beef supplies, in turn, lead to drastically higher
prices, making the industry more profitable.
On the downside, the industry is losing market share as
consumption of red meat is going down, Mintert said.
The hog industry has a similar situation to cattle, but is
faced with the challenge of porcine epidemic diarrhea virus. A recent outbreak
of PED is affecting survival rates of baby pigs.
“We typically hear 100 percent loss for three weeks until
animals can build immunity,” said Chris Hurt, Extension specialist at Purdue.
“We first saw it back in the spring of 2013 in the U.S. As
we moved into cooler weather, we saw more testing and more herds showing up
positive. It’s common for producers to talk about dreadful losses over a
three-week period to little baby pigs.”
The potential impacts of the disease still are unknown. Hurt
predicted that those hit hard by the virus may struggle to balance costs with
Those who are less affected by the outbreak may see more
“When you cut supply 2 or 3 percent you raise prices enough
that revenues go up,” Hurt said. “It will also raise the cost of raising those
“If average or less with PED losses, benefits of higher
prices may make them better off. Profitability is high. There will be a lot of
recovery and good returns for the hog industry, as well as a need to watch the
PED virus very carefully.”
He said there likely will be an era of moderation in feed
prices, helping costs around the livestock sector as a whole.