Most signals point to a slowdown in the nation’s cow herd expansion.
That means some planning may be in order for cow/calf producers, according to an analysis from the Livestock Marketing Information Center.
“From a longer-term strategic perspective, some planning may pay large dividends for cattle producers,” the center says. “Interest costs are rising, albeit at a measured pace.
“In terms of basic supply and demand market forces, there is the obvious uncertainty regarding demand for beef and hence cattle, given the international trade environment of tariffs and retaliation that has developed in recent months.”
Despite the tariffs, the LMIC says the U.S. beef industry has not seen the same impact as other commodities. Beef export tonnage set a first-quarter record this year, and the domestic economy continues to strengthen.
“For producers, the clearest market signal is on the supply side,” the center says. “The U.S beef cattle sector is well into the cyclical adjustment phase transitioning from aggressive herd expansion to very modest growth.
“Looking ahead, smaller herd growth rates will translate into the rather modest year-over-year increase in beef production in 2019. If recent cowherd trends persist, 2020 could mark the end of the current U.S. cattle inventory build-up.”
Calf and yearling prices should be similar to prices over the past two years, although the center says fourth-quarter prices may be lower than last year but higher than 2016 prices.
Cold-storage supplies for red meat declined in June. Pork numbers were down 10 percent from a month ago, according to the USDA report.
“Of the 12 categories of pork tracked, bellies and trimmings were the only two categories to show worrisome year-over-year gains, up 130 percent and 38 percent, respectively,” the LMIC says. “Although bellies are still building back from historically low levels of the prior year, both cuts also declined relative to May inventories, providing some comfort that the market is continuing to work through large pork supplies and changing trade landscapes.”