Producers encouraged to put 2019 behind them and look forward to the new year
Published on Jan. 18, 2020
“This past year, 2019, was a disappointing one, especially for cow/calf producers,” says Jim Rob, senior agriculture economist at the Livestock Market Information Center (LMIC) in Lakewood, Colo. during the University of Nebraska-Lincoln’s BeefWatch podcast, published on Jan. 6.
Despite the many challenges that came with 2019, Rob notes the upcoming year looks much more promising and encourages producers to look to the future.
“Although 2019 came with its struggles, it is still time to keep a sharp pencil, look at the upcoming opportunities and adjust production and marketing plans to take advantage of the new situations in the new year,” he says.
A year in review
Rob notes 2019 threw a lot of curveballs at the agriculture industry.
“We had some challenges with international trade and we had quite a bit of competing meat in the domestic marketplace,” he says.
Rob also notes cull cow prices were depressed due to large levels of beef and dairy cow slaughter combined with lack of slaughter capacity as well as large imports of beef coming out of Australia because of their ongoing drought and recent fires, which liquidated their cowherd and caused more beef to come to the U.S.
“There are always challenges in this industry, from drought and fire to snow and flood, but we don’t expect some of the same things to materialize this year,” Rob says.
U.S. cowherd predictions
Rob explains LMIC expects international trade to improve and slaughter numbers in the U.S. to shrink.
“Based on current slaughter data and some of our assumptions on heifer retention rates, we put the overall Jan. 1, 2020 U.S. beef cowherd down about 0.7 percent this year, which is a pretty significant decline,” Rob says. “We saw this decline because we had a lot of trouble getting cows bred up and there were quite a few open cows and first calf heifers that didn’t rebreed so they were thrown into the slaughter mix.”
He continues, “The shrinking of the U.S. cowherd trend started in 2019 and will probably gain some momentum in 2020. Therefore, we won’t be pushing as much beef into the domestic marketplace which is a positive.”
When looking at the first six months of 2020, Rob notes LMIC has estimated cattle feeder returns will be quite positive. He reminds feeders as they move into the second half of 2020 to take an honest appraisal of the marketplace and look at risk management.
“We will have higher calf prices in the fall of 2020 than we did in the fourth quarter of 2019,” Rob states. “In fact, our forecast at LMIC is up $12 to $14 per hundredweight on calf prices in the fourth quarter of 2020 compared to the same time in 2019.”
Rob also notes LMIC predicts cattle weights will be above the 2019 and 2018 averages.
“The last two years were really tough years on a lot of cattle feeders with muddy lots, cold snowy conditions and winter weather that refused to go away, especially in eastern Nebraksa, Iowa and eastern Kansas,” Rob says. “In fact, last year was probably one of the toughest cattle feeding years on record.”
“The good news is we think 2020 will be better,” he adds. “We are optimistic Mother Nature will be a little kinder this coming year.”
On the topic of tough weather conditions, Rob mentions the difficult time farmers had getting the U.S. corn crop planted due to wet conditions.
“There are always a lot of unknowns in this industry, but as we look ahead to this year, LMIC predicts some of the unplanted acres of 2019 will get planted in 2020. This combined with a more normal growing season will lead to a bigger corn crop and result in lower corn prices,” he says.
“On the hay side, the market is a little more difficult to call,” Rob notes. “We expect hay acres will be up a little this year, although Mother Nature always has a lot to say about how much hay we can get cut and put up.”
Competition in the marketplace
Another unknown Rob warns the ag industry to be wary of in the coming year is competition in the marketplace.
Rob explains in 2019 there were a lot of competing meats in the marketplace, however, the U.S. economy was strong enough consumers were able to make their way through the massive amount of available meat.
“This is the big question mark for 2020,” Rob notes. “Huge amounts of beef, pork and chicken are still coming into the market and if the U.S. economy slips, we don’t know if we will be able to stay on top of the competing meat issue.”
There is no way for anyone to know how the coming year will treat the agriculture industry, however, Rob encourages producers to put 2019 behind them and optimistically look toward the future.
Hannah Bugas is the assistant editor for the Wyoming Livestock Roundup. Send comments on this article to firstname.lastname@example.org.