Cattle market prices expected to improve in 2020
By Clint Hardy, Messenger-Inquirer (KY)
Dec 2, 2019
Few cow-calf producers are going to fondly remember the weather of 2019. As discussed in my article last week, the first three months of the year were one of the wettest, muddiest winters Kentucky has ever seen. This resulted in a lot of stress on cattle, loss of calves, and increased winter hay feeding. There was even some damage to pastures and feeding areas. In early fall, Kentucky encountered a prolonged drought that halted pasture growth and forced many people to feed hay inventory earlier than normal. November followed with several days of hard freezing that ended pasture growth for the year. On top of the tough weather, the fall 2019 market prices will continue to be tough as well. Dr. Kenny Burdine, University of Kentucky Extension Livestock Marketing Specialist, explains why in the following article.
Production levels across all major meats were high in 2019 and put downward pressure on retail prices. Constant uncertainty about trade seemed to hover over the market. The fire that took place at the Tyson processing plant in August certainly did not help the situation as it made feed cattle prices lower this fall. Our fall calf market found its lowest level since 2016, settling in the mid-$130s per cwt (hundredweight), which was $10 to $15 per cwt lower than 2018.
While there is no way to know with certainty, Dr. Burdine thinks that fall 2019 is going to be the low for this price cycle. Most supply signals are pointing to an end of herd expansion. USDA's July Cattle Inventory report showed flat beef cow numbers from 2018 and a slight decrease in the size of the 2019 calf crop.
Heifer retention was down in both the January and July reports and beef cow slaughter has continued to be large. Through September, beef cow slaughter has been 2% above 2018 levels and 13% above 2017 levels.
In addition to the supply signals, there is a new demand factor that will likely be at play in 2020. It is hard to over-emphasize the significance of African Swine Fever in China. Pork is the most consumed meat worldwide and China leads the world in pork consumption. The loss of hogs that they are experiencing is going to have an impact on protein consumption. Despite the tariffs in place, United States exports of pork to China have been a lot higher since spring and we are seeing spillover effects on beef exports. It is also no coincidence that China has lifted its ban on U.S. poultry imports. So, while a large number of factors will impact beef and cattle prices going forward, Dr. Burdine is optimistic that cattle producers will enjoy a better year in 2020.
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