Encouraging outlook: Current market projections bring good news to beef producers
Averi Hales, Wyoming Livestock Roundup
February 19th, 2021
Good news is always welcomed in the beef industry, especially in terms of cattle markets.
“So many times we are in the dumps about the cattle market, but the industry is going into a supply trend producers will like,” said Commercial Cattle Manager and Livestock Market Analyst for DV Auction Corbitt Wall during The Business of Beef: Health and Management Summit presented by Boehringer Inglehim on Feb. 11. “For a change, this trend is going to favor cattle producers.”
Wall shared the cattle market has been dealing with large supplies since 2014, and producers have started to see evidence of the cattle supply decline. However, he noted, declining supply is good for the cattle market from the producers perspective.
Current cattle industry
“The last U.S. Department of Agriculture (USDA) cattle inventory report was bullish,” Wall noted. “From the surface, it might not have seemed like it. After the USDA revised 2019 cattle numbers down 620,000 and the calf crop down 468,000 to start 2020, the beef industry is working with a total inventory of 93.6 million head which is significantly smaller than the 94.4 million that was predicted.”
Wall explained these numbers mean the industry is facing significantly tighter numbers of market-ready fed cattle moving into the second quarter of 2021. With this comes the opportunity for producers to gain ground in the market, and the demand for yearling cattle and calves should increase.
Sharply higher input costs, including corn trading well over five dollars per bushel, is something producers haven’t had to deal with for a while, Wall said. Grain has become more expensive as interest from China has increased, and the export demand for grain has overshadowed the lack of demand from ethanol plants.
“It is unbelievable how the export demand for grain has more than made up for this loss,” said Wall. “Although, without ethanol plants up and running, the cattle industry does not have the byproducts from ethanol production many have gotten used to feeding.”
Large cattle carcasses have also contributed to higher input costs...
Market and industry projections ...