Cattle, Hog Prices Could Hinge on Domestic Demand in 2021

 

By Tyne Morgan, FarmJournal's Pork 

January 6, 2021

 

Livestock producers faced a rollercoaster of prices and events in 2020. As the pandemic caused a major bottleneck in processing, prices responded negatively. But the silver lining of 2020 was the export side where a phenomenal story of demand played out.

 

Heading into 2021, analysts say some of the themes from 2020 may continue, including strong beef exports.

 

“I do anticipate it to continue in the beef market, because if I look at Australia, they're still rebuilding their herds, and probably a million less head will be exported in 2021,” says Dan Basse of AgResource Company. “I'm a little less optimistic in pork where the Chinese probably will be rearing back again, I still think they'll try to adhere to their $43 billion [Phase One} pledge, but I think as their hog herd expands, I do believe they'll probably import less pork, but maybe more beef.”

 

Basse says his biggest concern moving forward is with pork and a reduction in pork exports. Pork is also an area of concern for Arlan Suderman on StoneX Group, but he says the thing to watch in 2021 will be domestic demand.

 

“Seasonality has been kind of out the window of late in these livestock markets because of the COVID-19 issues that have been happening around the world, as well as what’s happening with China,” says Suderman. “I think our near-term concern continues to be what happens with domestic demand. I agree with Dan on the export prospects into China. We have some other export markets that are developing as well for the beef sector. But domestically, until these vaccines really get enough distribution, we've got some real concerns.”

 

Suderman says the biggest concerns are with food service and restaurant industries not able to start recovery as more are forced to shut down. He says that loss of demand will cause supplies to back up, which he fears will translate into weaker prices in the first quarter. That’s why Suderman says he is more optimistic on cattle prices the second half of the year. He says the longer-term outlook on pork could hinge on domestic demand.

 

“One of the things that we're seeing in China is a big push toward discouraging consumers from buying imported meat,” says Suderman. “Can they change the habits? We're seeing local provinces that are punishing consumers from buying imported meat, making them pay fines in some cases, making them have extra COVID-19 testing at their expense as they buy imported meat. Some consumers are saying it's just not worth buying imported meat, and that's one of the challenges we have in being able to maintain our export of meat into China over the coming year.

 

Basse also thinks the second half of the year could pose issues for exports and could put more pressure on the domestic side to carry the weight for pork...

 

more, including video report [4:13 min.] 

https://www.porkbusiness.com/news/hog-production/cattle-hog-prices-could-hinge-domestic-demand-2021