Cattle Prices Set to Strengthen Beef production this year is poised to grow again and the low cattle prices for the cattle cycle are in the rearview mirror. By Wes Ishmael
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, according to CattleFax analysts, at that organization’s recent 2020 Industry Outlook in San Antonio. CattleFax projects fed steer prices to average $120/cwt. during 2020, which would be $3 more than last year. Kevin Good, CattleFax vice president of industry relations and analysis, notes there is downside risk at $108 and resistance at $130. “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,” says Good. He projects all-fresh retail prices will average $5.87/lb., 5¢ more than in 2019. CattleFax projects average composite cutout prices $3 higher this year at $222/cwt., with a range of $210-$235. “Higher wholesale beef values are a reflection of improving domestic and global beef demand,” Good explains. CattleFax forecasts steer calf prices (550 lbs.) this year $6 higher than last year at an average of $170/cwt., across a range of $155-$180. “With total cattle inventories at or just past a cyclical peak, feedlot inventories will likely peak in the next few months,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in recent weekly market comments. “However, average feedlot inventories are currently record large. After peaking last August then declining for two months, the 12-month moving average of feedlot inventories moved higher the last three months and is currently at 11.639 million head, record large for the current data series back to 1996.” In January, the World Agricultural Supply and Demand Estimates projected 2020 beef production at 27.44 billion lbs., which was 75 million lbs. less (-0.27%) than the December forecast, but still 289 million lbs. more (+1.06%) than in 2019. As for feeder steer prices (750 lbs.), CattleFax projects an average increase of $6, compared to last year, at an average of $150/cwt., across a range of $140-$160. CattleFax sees bred cows steady at $1,500, across a full range of $1,200 to
reach 83 million acres. He pegs spot corn prices at $3.50-$4.00/bu., which would be 15¢ to 20¢/bu. less than last year, notwithstanding significant weather pressure.
$1,800 for load lots of running-age cows. On the input side of the equation, Mike Murphy, CattleFax vice president of research and risk management
services, predicts acres planted to corn will increase 4 million acres to 94 million acres this year and that soybean acres will increase 7 million acres to
Herd Expansion Ends, for Now
Based on USDA’s cattle report released Jan. 31, as widely expected, national herd expansion is over.
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