Heading into the new year, cattle markets see some reasons for optimism with sources of support, but also some potential headwinds.
“Looking ahead to 2020, cattle prices have some supportive tailwinds, especially when compared to the results posted in 2019,” the Livestock Marketing Information Center says in a recent analysis. “U.S. beef production is forecast to only have a modest — about 1% — year-over-year gain. For 2020, current forecasts are for tonnage imported to decline and for exports to grow.”
Smaller trends in calf crop sizes should also show an impact on markets.
“The 2019 calf crop was smaller, and 2020 will likely follow that trend,” the LMIC says. “On a per-person basis, domestic beef availability is expected to slip slightly compared to 2019’s and record its second consecutive decline. Those availability factors all point to modestly higher fed cattle prices, up 1% to 4% next year, with the largest percentage gains in the second half of the year.”
Calf and yearling prices should also see support from feed costs and grazing potential.
“Turning our attention to calf and yearling prices, they are expected to be underpinned by rather strong fed cattle prices and low feedstuff costs,” the LMIC said. “If spring grasslands green up normally, lightweight animal prices could face good demand for summer grazing programs.”
Calf prices remain connected to trends in U.S. corn crops.
“Last summer reminded us that calf and yearling prices can be lowered quickly by any problems with the U.S. corn crop,” the center says. “A smaller forecasted spring-born 2020 calf crop and a normal summer growing season sets the stage for next year’s fall weaned calves to price near to slightly above 2017’s prices, (meaning) above both 2018 and 2019 prices.”
Of course, the new year does bring some potential challenges for markets.
“What are the potential headwinds to the markets?” the LMIC says. “First, at this time of year, we always give a nod to the potential for drought negatively impacting the cattle market.”