The avian influenza outbreak continues to grow and leads to more questions about the impact on livestock and meat markets. USDA-APHIS (Animal and Plant Health Inspection Service) reports that the current toll is nearly 34 million birds depopulated.

The old saying is “hope for the best, but plan for the worst.” When it comes to forage considerations for cow-calf producers, I believe there is a need to plan for the worst and plan for the best.

The inventory of all cattle and calves was 89.8 million head on Jan. 1, 2015, up 1.4 percent from one year ago but, except for last year, still the smallest total herd inventory since 1952. The 2014 calf crop was up 0.5 percent from 2013 at 33.9 million head. The 2014 calf crop percentage (calf crop as a percent of all cows) was 88.5 percent, the highest percentage since 2006.

The inventory of all cattle and calves was at 89.8 million head on Jan. 1, 2015, up 1.4 percent from one year ago but, except for last year, still the smallest total herd inventory since 1952.

The euphoria of high cattle prices in 2014 leads, for some cow-calf producers, to uneasiness and indecision in 2015. The question is how to best take advantage of the current market. The answer to that depends on several factors including: The current status of the operation, i.e., is the operation at full capacity or is there room to grow? The producer’s market expectations for the next several years. For older producers: Is there a time frame for retiring or exiting the business?

All the ingredients came together to cause a significant break in feeder cattle markets in the last week of cash market trading before the Christmas and New Year’s holiday break. The impact on cash feeder cattle markets came after several days of sell-off in feeder futures.

In 2014, cattle and beef prices advanced from (what were then) record levels at the beginning of the year to a nearly continuous series of record levels throughout the year. Cattle and beef prices are expected to maintain these levels in 2015, not increasing as much or as fast as in 2014 but averaging higher than 2014, and are likely to set new record prices seasonally during the year. For the most part, the same factors we have been watching in 2014 will determine how much higher cattle and beef prices will push in 2015.

"Feeder and fed cattle prices are at or near all-time highs and are poised to keep moving higher. Both feeder and live cattle futures suggest that higher prices are yet to come. In several recent meetings and conversations with producers, I am seeing a couple of reactions to the current situation.

International cattle and beef markets are reacting as expected to record U.S. market prices. The latest monthly trade data for July confirms that beef exports are declining; and beef and cattle imports are increasing as markets adjust to shrinking U.S. beef and cattle supplies.

About a year ago I wrote an article entitled “Cattle markets move past summer lows.” The title of this article reflects how far we have come and serves as a reminder that the current cattle and beef market situation is the result of a market run that began over a year ago.