In this file:
· Herd expansion ends and should remain short-term
· Strong beef demand, leverage shift adds optimism for year ahead
Herd expansion ends and should remain short-term
By Julie Harker, Brownfield
February 7, 2020
A professor with the Western Illinois University Ag School says the cattle inventory report shows that herd expansion has come to an end and should stay there short-term. Jason Franken tells Brownfield Ag News, “With all the uncertainty coming out of trade deals, and especially with the coronavirus at least in the near term, that’s going to be a disincentive for producers to expand. With the prices I’m looking at it’s going to probably keep things fairly even-keep, I would think.”
He expects cattle prices this year to land in similar ranges as the last couple of years. For slaughter steers, he sees quarterly averages to start at $123 and end at $113.
Franken says domestic beef demand could also be affected, “There have been cases of coronavirus show up in the U.S. And if that did spread to the extent that it even decreased domestic travel and restaurants and such that could have a downward effect on domestic demand as well.”
Franken says there’s another sign that producers are unwilling to keep expanding...
more, including audio [3:32 min.]
Strong beef demand, leverage shift adds optimism for year ahead
Source: South Dakota Cattlemen's Association
via Aberdeen News (SD) - Feb 7, 2020
San Antonio, Texas – Beef demand is strong and with U.S. cattle numbers plateauing, prices are likely to be stronger in the year ahead as consumers at home and abroad support industry profitability. That was the message delivered on Feb. 6 during the popular CattleFax outlook session, held as part of the 2020 Cattle Industry Convention in San Antonio, Texas.
Weather is expected to play a supporting role for agriculture during the year ahead, according to Dr. Art Douglas, professor emeritus at Creighton University. He said that following repeated El Niño events during the past five years, the U.S. will shift to a La Niña pattern, which will shift much of the nation outside of the northwest and southeastern portions of the country toward conditions slightly warmer and drier than last year, which will be favorable for planting and growing conditions during the spring and summer.
CattleFax Vice President of Research and Risk Management Services Mike Murphy predicted that corn and soybean acres will increase during the year ahead, with corn plantings rising 4 million acres to 94 million acres and soybean acreage rising 7 million acres to reach 83 million acres. He predicted 2020 spot corn prices to trade in a range of $3.50 to $4.00 per bushel, down 15-20 cents per bushel from 2019, unless weather issues become a significant factor. He noted, however, that trade could present an upside to the projected prices, particularly in light of the recently signed U.S./China trade agreement.
Trade also will play a significant role in beef and cattle markets, according to CattleFax Vice President of Industry Relations and Analysis Kevin Good, who said he expects higher total animal protein production to be offset by strong demand and increasing exports. During the year ahead, Good said record-large U.S. beef production will reach 27.7 billion pounds. However, he projected that increases in beef exports and decreases in beef imports will result in per-capita beef supplies of 58.4 pounds, an increase of just 0.4 pounds over 2019 levels.
“With strong demand for U.S. beef at home and rising demand overseas, the modest increases in supply will be more than offset by a growing consumer appetite for our product,” said Good, who projected all-fresh retail prices will rise to reach an average of $5.87 per pound during the year ahead, an increase of 5 cents per pound over 2019. “Higher wholesale beef values are a reflection of improving domestic and global beef demand,” Good noted, pointing out that CattleFax projects composite cutout prices will rise $3 during the year ahead to reach $222 per hundredweight.
Growing demand and increasing beef prices at the consumer level will be supportive of cattle prices, with leverage beginning to shift away from the packing sector as more shackle space becomes available during the year ahead. Good said CattleFax projects fed steer prices to average...