Invest In Production Land: Cattle Prices Getting Stronger
Written by Jerry Hicks, Ranch Broker and Scott Hawes, Principal Broker, Oregon
Industry experts anticipate improved cattle prices for 2020. It is believed that the US beef cattle herd expansion that began five years ago has run its course and is entering into a liquidation phase. While it is anticipated that 2020 will see record beef production, the continuation of the longest US economic expansion in history continues to support domestic beef demand.
The effects of the African Swine Fever’s decimation of the Chinese hog herd is beginning to increase Chinese demand for US beef. Further support for the US beef export demand is expected from the global protein shortage, new trade agreements with Japan and EU, and President Trump’s signing of the United States-Mexico-Canada Agreement, which still needs to be ratified by Canada. If a trade agreement with China can come to fruition, even greater export demand can be anticipated. 2019 US dairy cow and beef cow slaughter was very large and is anticipated to be significantly lower in 2020, adding further support for US beef prices. Corn and soybean acres are expected to regain acres lost due to the 2019 wet Spring and with normal yields, corn prices should decline.
Key variables for improved 2020 beef cattle prices yet hinge on the possibility of drought, the US corn, soybean and hay crops and the return to profitability for the feeding sector. It’s amazing to see how much the markets change on a 2-4% inventory move. Demand or perceived demand usually creates an upward move in market values. It does seem that the stars are in alignment for a better market just ahead.
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