CATTLEFAX TRENDS
2022 INDUSTRY OUTLOOK
February 2022
Executive Summary: Moving Into a Growth Mindset Cattle price and profitability trends for producers are pointed in the right direction, even as challenges and uncertainty persist with continued disruptions from the pandemic. The market-ready cattle supply is more balanced entering 2022 as pandemic-related carryover has been minimized and three years of cowherd contraction have added less cattle to the system. Issues around labor and packing capacity have lingered, but both are expected to improve through 2022. Expansions, additions, and newbuild packing investments have been announced to increase packing capacity in coming years. An additional 2,500 head/day is planned
to be in use by late 2022 and another 8,000 head/day or more is in various stages of planning. These expansions in capacity will help foster growth in the cattle and beef industry. Global and domestic demand has strengthened and is expected to continue to increase over time, which should bring more dollars into the industry. Even as cattle supplies and leverage cyclically shift, more money flowing into the system suggests room for more profitability across segments and allows for a more stable and healthier industry.
La Niña remains firmly in control of the ocean-atmosphere system, and that is unlikely to change this spring; however, it remains possible that there will be some changes throughout summer. The latest set of analog years resulted in about a dozen potential best-fits. Of those, roughly one-third remained in La Niña for another year, another third transitioned into a neutral phase, and the remaining turned into El Niño by the following summer and fall. NOAA’s data suggests there will only be slight warming in parts of the Equatorial Pacific – meaning more La Niña on the way, and European climate modeling suggests neutral conditions as the Pacific begins to warm. Out of these solutions and analog-year indicators, the lean is more toward a continued La Niña to neutral phase and with a lower probability of a true El Niño forming this summer, fall remains to be seen.
With that said, the drought situation across southern Brazil to Argentina remains an issue. Conditions across Australia will remain favorable. In western Mexico, the monsoon should develop by late spring and spread northward toward the U.S. In Canada, there is the influence of troughing to keep the weather variable. For the U.S., barring any change to the La Niña outlook or sudden warming in the Gulf of Alaska, dryness continues across the Southwest and South with warm temperatures, too. The Northern Plains and Corn Belt are expected to have wetness farther east this spring and drier conditions for this summer, with temperatures closer to normal versus 2021. Although the climate effects of the recent Tonga Volcano are currently unknown, it bears watching this year.
Extended Range Weather Outlook
Become a CattleFax Member Today! Producer memberships start at $225 per year. Visit booth 2733 to discuss membership levels and benefits with an analyst during the Cattle Industry Convention & NCBA Trade show. Everyone is welcome to visit the booth this week to talk with analysts about the markets or discuss weather patterns with our weather analyst Matt Makens.
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March 2022
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