Cow-calf producers have been facing tough market situations in 2019 due to a number of factors, as well as overall production difficulties.
“Markets in 2019 have been a challenge for U.S. cow-calf producers,” the Livestock Marketing Information Center said in a recent analysis. “Mother Nature has impacted producers far and wide with blizzards at calving, flooding and drought. Calf prices were pressured during the late spring and early summer months by surging corn prices.”
Even with corn prices coming down somewhat, it remains more costly.
“Recently, year-over-year corn prices have moderated significantly, but Omaha corn is still at $3.92 per bushel, 18% above a year ago,” the LMIC said.
Other market and processing issues have contributed as well.
“The negative cattle market impacts of the Kansas beef packing plant fire also have spilled over to the feeder cattle and calf prices,” the LMIC said. “Low cull cow prices have added to the financial struggles.”
All these factors add up to make 2019 a challenging year for cow-calf producers, as evidenced by projected profits.
“Overall, this year’s estimated cow-calf returns over cash costs plus pasture rent for the Southern Plains is projected to be negative and the worst since 1996 (unadjusted for inflation),” the LMIC said. “Three out of the last four years have been in the red.”
Still, producers are hopeful for better conditions in 2020, and the marketing center says some factors indicate there could be better years ahead.
“The drivers of cow-calf profitability may be turning more favorable in the next few years,” the center said. “LMIC forecasts that production costs may decline some in 2020, mostly due to lower interest costs on a per-cow basis. And revenue should improve if higher calf and cull cow prices materialize, as expected. Producers should be planning for cyclically higher returns in 2020 and 2021.”