Cattle prices in 2017 are expected to average close to fourth quarter 2016 levels, though they will be lower than 2016 for year over year averages. Several factors may have a significant impact on cattle and beef markets in 2017 and may change current price expectations. These factors bear close watching in the coming year.
Uncertainty and Volatility
Uncertainty and volatility, from a variety of sources, will continue to hover ominously over cattle and beef markets in 2017. Current U.S. macroeconomic conditions are encouraging; the stock market finished strong and unemployment was low at the end of 2016. However, the economy is gearing up for higher interest rates and potentially higher inflation moving into 2017. Uncertainty surrounds the changes that have been suggested by the incoming Trump administration. The economic impacts may be positive or negative or, more likely, some combination of both, but the uncertainty surrounding coming changes is without question a negative. In addition to U.S. macroeconomic uncertainty, global market uncertainty will likely continue in the coming year. The Brexit vote of last summer has been followed by several additional populist moves in Europe that add to global economic uncertainty. Separate but related to macroeconomic uncertainty, volatility in Live and Feeder cattle futures has significantly reduced the effectiveness of these tools for price discovery and risk management and contributed to additional cash market volatility, which appears likely to continue in 2017.
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