Strommen Ranch

Photo submitted by Aaron Strommen, Strommen Ranch, Fort Rice, N.D. Strommen Ranch will be offering 60 yearling Angus bulls at their ranch in Fort Rice on Saturday, Feb. 15, at 3 p.m. They will also be a part of the Badlands Angus Alliance, selling 60 coming 2-year-old Angus bulls and 500 plus commercial bred heifers at Stockmen’s Livestock Exchange in Dickinson, N.D., on Dec. 1.

There were no surprises in January’s USDA Cattle Inventory Report. After increases in the U.S. beef cow herd every year since 2014, Jan. 1 numbers revealed a slight dip in inventory – around 1 percent – meaning the cow herd has peaked.

 

“We have record beef production,” said Tim Petry, NDSU Extension livestock marketing economist. “I think the good news there for prices is that we’re going to have less calves.”

 

Petry pointed out the industry is still going to have more fed cattle to sell this year, which should put a little bit of pressure on prices in 2020, but because cow/calf producers in the Northern Plains are going to have fewer claves in the fall, that should be supportive to prices in the future.

 

“Although we had record beef production last year, I think we’re going to be record again this year,” he said. “It’s only going to go up slightly, but demand has been good, so that has to continue.”

 

The U.S. domestic economy is doing very well and the stock market has been up until just before the end of January. The one factor that could affect beef exports is the concern over the coronavirus in China. The virus’ impact on the world economy and China’s demand for meat will be a hot newsworthy item moving forward, according to Petry.

 

Overall, there seems to be better times ahead for livestock producers. For calves, Petry says it all depends on corn prices, which are a big unknown right now.

 

“What kind of corn crop are we going to have? In North Dakota, we still have half our corn left to harvest, let alone talking about planting next year,” he said. “There’s a lot of uncertainty on the corn side. If we change corn prices 10 cents per bushel, we change cattle prices a dollar in the opposite direction. Any struggle with corn planting would not be supportive to prices.”

 

As for the cattle supply side of the equation, there’s going to be less cattle and Petry predicts record exports for 2020. Exports in 2019 struggled due to a flurry of trade negotiations between the U.S. and our top four customers – Japan, Korea, Mexico and Canada.

 

“It looks like we’ve settled our agreements with all of those countries,” he said. “The USMCA (U.S.-Mexico-Canada Agreement) has to be approved yet by Canada, but we’ve signed off on it, Mexico has signed off, and we have agreements with Japan and Korea. This all points to record exports this year. We have to watch the domestic economy, we have to watch corn prices, but supplies are going to be down.”

 

Another factor worth monitoring is African swine fever. The outbreak in Asia created a big demand for beef, but the U.S. was stifled by trade agreements during that time.

 

“We have to see how that situation expands and how our exports do,” Petry said. “There’s always unknown things to be aware of.”

 

While supplies are down and demand looks good, Petry stresses the importance of not being complacent, saying there are always unexpected things that can pop up and alter the current situation.

 

“Just last year, we had the Tyson packing plant (near Holcomb, Kan.) burn down, so that upset the market for a month or so before responding right back up, as expected,” Petry explained. “There are always issues looming.”

 

While there’s plenty to keep an eye on when it comes to the cattle market, barring any weather issues, Petry expects the market to stabilize for a number of years.

 

“The only thing that could affect it would be drought. That could lead to some forced liquidation,” he said. “It’s a little dry down in Texas, but along the Northern Plains, we’re kind of too wet, so we should have good grazing conditions.

 

“We’ll probably maintain the cow herd, and as demand goes up, we’ll probably hold production. Hopefully, we’ll have record exports. I think there are better times ahead. We just have to wait it out here on the cattle side,” Petry concluded.

Sign up for our Weekly newsletter

* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.