In this file:
· Kay’s Cuts: US beef producers facing a brighter year
· Economist predicts “modestly stronger prices” in cattle markets
Kay’s Cuts: US beef producers facing a brighter year
Steve Kay, BEEF Central (Australia)
January 13, 2021
A monthly column written for Beef Central by US meat and livestock industry commentator Steve Kay, publisher of US Cattle Buyers Weekly
THE year of the pandemic is one that no one will ever forget. But cattle producers in the United States and Australia would surely like to erase 2020 from their memories.
A year that began with the promise of stable markets and slightly higher prices for all classes of cattle was totally upended by a virus pandemic no one could have forecast. However, the beef industries in both countries, but especially in the US, start 2021 with cautious optimism of a return to normalised markets and pricing patterns.
In this context, it is worth reminding ourselves just how devastating the COVID-19 pandemic was on the US industry. It is even more important to remember how it disrupted Americans’ and Australians’ lives, with many families having the additional heartbreak of losing a loved one to the virus, with the added pain of that loved one dying without any family members at their side.
As readers know, the disease outbreak by early March was declared a global pandemic and continued to wreak havoc on global equities and commodity markets, and on the global beef trade. Trepidation gripped the US industry throughout April as beef production levels declined to unprecedented lows relative to plant capacities because of worker illnesses and absenteeism. The last week of April saw US weekly cattle slaughter total 439,000 head, 68 percent of available slaughter capacity. The average price of live grainfed steers that week was 21pc below the same week in 2019.
Remembering how dire the challenges were is important, because what occurred in May and June was nothing short of a miracle. The many ways the US industry, from ranch to retail, tackled these challenges and returned to normalcy in such a short time is one of the greatest stories in the industry’s long history. Production levels had returned to normal levels by late June.
A return to a semblance of normality is likely this year even if the COVID-19 pandemic continues well into 2021. Everyone in the industry will be hoping that the markets will avoid the kind of extreme volatility seen last year. US packers saw record operating margins throughout last year, but cattle feeders, cow-calf operators and other cattle producers saw slim or even negative returns.
Higher cattle prices ahead
Prices for all classes of US cattle are currently forecast to be higher than last year, especially those for grainfed cattle. USDA’s 5-area steer price in 2019 averaged US$116.78 per cwt live and was expected to be around the same level last year. It was on track to achieve this in the first quarter when it averaged US$118.32 per cwt. Then the pandemic’s impact began. Second quarter prices averaged US$105.79 per cwt, third quarter prices US$101.74 and fourth quarter prices US$107.95. Annual prices averaged US$108.45 per cwt, their lowest level in many years.
Prices for US feeder (young) cattle fared a little better. The price of a medium frame No. 1 steer at Oklahoma City averaged US$142.23 per cwt in 2019. Prices last year were: first quarter US$136.42 per cwt, second quarter US$126.37, third quarter US$141.42 and fourth quarter US$137. The average for the year was US$135.30 per cwt.
USDA’s and other analysts’ forecasts for prices this year will offer hope for producers...
Economist predicts “modestly stronger prices” in cattle markets
By Anna Hastert, Iowa Agribusiness Radio Network
January 11, 2021
“COVID-19 was the underlying driver of a lot of the disruption we saw throughout 2020,” shares Michael Nepvuex, American Farm Bureau Federation economist. Nepvuex offered remarks on the cattle market during a breakout session at the Federation’s annual convention.
Nepvuex relays frustration as, “2020, in terms of livestock and animal protein, was shaping up to be a decent year.” Economists anticipated increased production of red meat and poultry. However, a pandemic quickly derailed some of those predictions.
United State cattle producers will face similar challenges in 2021. Derrell Peel, Oklahoma State University agricultural economist, expects the first half of 2021 to be “a continuation of what we were dealing with in 2020, from the pandemic standpoint.”
“That means, among other things, we continue to see limitations in the food service sector. That’s half, or more of our market that is substantially restricted. We’re still putting a lot of emphasis on the retail/grocery sector to compensate for that. Some of the product challenges that go with that will continue as we go forward,” Peel says.
Peel says, “The good thing is, to a large extent, cattle and beef markets ended on a positive note. We’re starting with a bit of momentum in these markets going forward.” The Livestock Marketing Information Center’s price forecast anticipates...