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BEE
Contribute To ‘Solid’ Year
Ahead For Industry
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by Carol Ryan Dumas
Capital Press
strong U.S. economy is keeping domestic beef demand steady,
but a growing global appetite for beef is reshaping U.S. markets.
The U.S. beef industry has moved from a supply-driven market to a
demand-driven market, Joel Packham, University of Idaho Extension
educator, told producers during the University’s Ag Outlook
conferences in December.
“That’s somewhere we haven’t been in a while. We have lots of
supply, just now demand is driving markets,” he said.
African swine fever in China and growing economies among some U.S.
trading partners has USDA projecting U.S. beef exports will be up 5% in
2020 and imports will be down 2%, he said.
China’s pork production is way down, and it’s trying to make
up for it by importing more
animal protein. Australia is
shipping all the beef it can to
China, leaving little to export
to the U.S., he said. China is
taking all they can get.”
Australia is also shipping
beef to Japan, but drought
will limit Australia’s beef
supply, he said.
The U.S. doesn’t have a full
trade agreement with China
in place, but the new U.S.-
Japan trade agreement should
lead more U.S. shipments
to Japan, including markets
given up by Australia’s limited
supply, he said.
Exports are a huge driver in U.S. beef demand, and they pump a lot
of money into the U.S. industry.
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The value of total U.S. exports of beef and beef byproducts is nearly
$10 billion annually. By 2025, exports are projected to add a value of
$400 per head to every beef animal slaughtered in the U.S. “That’s a
big boon. That $400 is really a valuable thing,” he said.
African swine fever and Australia’s drought will also limit U.S.
imports from Australia—as well as New Zealand, which is also
sending more beef to China.
The U.S. brings in beef from those countries for grinding. The
talk has been the price of U.S. ground beef is going to jump as U.S.
processors use whole muscle cuts for grinding, he said.
In addition to fewer imports, there’ll be fewer dairy cull cows as
higher milk prices have put the industry in an expansion phase. “The
price of cull cows is going to be
pretty high, and (beef) people will
be more willing to cull,” he said.
Expansion of the beef herd
already appears to be leveling, and
the industry looks to be at the end
of another cycle. “We think we’re at
the turning point. We’re retaining
a few less heifers for replacement,
and that signals a decreasing cow
herd for expansion,” he said.
Projections are for slightly
higher cattle prices in 2020—with
an average of per hundredweight
price of $118 for fed steers, $146
for 750-pound steer calves, $165
for 550-pound steer calves and
$65 for utility cows.
It’s “not anything earth-shattering but a good, solid year for the beef
industry,” he said.
• JANUARY 2020