Despite record beef production, cattle prices have remained strong.

Much of that can be attributed to a strengthening economy and exports, according to an analysis from the Livestock Marketing Information Center.

Beef production is estimated to be at 27.1 billion pounds in 2018, up 3.3 percent from a year ago. The LMIC estimates fed cattle prices to be down 3 to 3.5 percent from a year ago, which represents the lowest annual average since 2011.

The center says calf and yearling prices are expected to be higher than prices in 2016 and 2017, adding growth in the cattle inventory will be modest as the aggressive phase of the cycle has passed.

While current conditions look favorable, the center warns there are some concerns.

“There are unknowns and potential headwinds for cattle markets during the next few years, not the least of which is the potential for U.S. beef, pork and chicken exports to falter under a cycle of tariffs and retaliation,” the LMIC says. “Also, any significant weakness in the domestic or global economy compared to the healthy conditions of the last 12 months could dampen demand for beef, and therefore cattle.”

With expansion slowing down, beef production will likely grow more slowly in the coming years.

“Assuming normal weather conditions, expect U.S. beef output to be about 27.5 billion pounds, up 1 to 2 percent for the year,” the LMIC says in its analysis. “That would be the smallest percentage increase since 2015 (note that year was the last to record a decline).”

The center expects first-quarter fed cattle prices to be lower than in 2018, with prices similar the rest of the year compared to a year ago.

“A normal 2019 Midwest corn crop would set the stage for steady to modestly higher yearling and calf cattle prices in the second half of 2019 compared to the corresponding quarters in 2018,” the LMIC says. “If recent trends persist regarding cow and heifer slaughter levels, 2020 could mark the end of the current U.S. cattle inventory build-up.”

“Preliminary forecasts place beef output in 2020 unchanged to up 2 percent year-over-year. If the U.S. economy is still growing in 2020 and export markets do not deteriorate, expect modest year-over-year gains in prices forecast during that year.”

Jeff DeYoung is livestock editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.