Markets
Plan for Flat Prices
“We see a gradual increase in calf prices over the
next two years. For 2020, in the Southern Plains,
we’re talking between $170 and $175 per cwt
for steer calves [500 to 600 pounds],” said Jim
Robb, senior agricultural economist with the
Livestock Marketing Information Center (LMIC).
Although prices are expected to increase,
during the recent BEEF Market Outlook
webinar, Robb emphasized that the price
profile remains relatively flat, in tandem with
expectations for cattle numbers to increase.
Cyclically speaking, Robb explained producers
currently face little economic incentive
to grow or reduce herd numbers.
“Both beef cow numbers and total cattle numbers
may be about flat for the next several years, with
a slight downward trend,” Robb said. “That’s very
unusual. The last time we had this was clear back
in the late 1950s and early 1960s. Typically, the
numbers go down, and we have opportunities
with cull cow prices and bred cow prices.”
In other words, static numbers will
likely alter previously successful cyclical
and countercyclical strategies.
In its 2019 Baseline Outlook, the Food and
Agricultural Policy Institute (FAPRI) at the
University of Missouri pegs peak beef cow
number for the next decade at 31.8 million
head this year, falling about 200,000 head
per year through 2024, and then drifting to
30.2 million in 2028. FAPRI analysis included
market information through February 2019.
Conversely,
Despite current
USDA
strength,
Agricultural
unresolved
Projections to
2028 project
trade issues
the beef cow
could pose a
herd at 31.4
barrier to U.S.
to 32.0 million
for the next
beef exports.
decade. Those
projections were completed in October 2018.
“The extent of reductions will depend upon
pasture conditions and feed prices,” according
to FAPRI analysts. “Productivity growth will
partially offset breeding herd declines.”
Incidentally, FAPRI projects the price for
steers weighing 600 to 650 pounds (basis
Oklahoma City) at $143.92 per cwt in 2020,
compared to a projection of $153.30 for
By Wes Ishmael
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