Livestock markets this year look to capitalize on reduced world protein supplies associated with African swine fever in Asia, according to Todd Hubbs, agricultural economist at the University of Illinois, in a presentation at the Illinois Farm Economics Summit in December.
Hubbs said he expected robust exports through the year. Domestic meat demand also remains strong despite fears of an economic slowdown.
PORK PRICES STRONG, FEEDER CATTLE SOFTER
Strong pork exports place US hog price potential at higher levels than last year, he said
However, feeder cattle prices may come in slightly lower than last year through the first half of 2020, Hubbs said, although price prospects in the second half of the year should materialize as supply moderates.
US beef production was expected to increase by 2% in 2020 27.6 billion pounds, up 0.5 billion over 2019, he said.
Domestic beef demand remained strong in the third quarter of 2019 at 56.4 pounds, but 2020 consumption could fall to 56.4 pounds, down 0.7 pound, Hubbs said.
Beef export markets continued to build through the end of 2019 with projections for the final total to be 3.3 billion pounds, up from 3.1 billion in 2019, he said. Recent strength in export markets was derived from strong demand in Japan, South Korea, China and other Asian markets.
Fed cattle prices look to move higher in the first half of 2020 on strong demand, he said. Fed cattle prices averaged near $114 in later part of 2019 but look to average near $118 in the first half of 2020.
Feeder steer prices averaged near $163 in 2019, and projections placed 2020 prices near $168, he said.
PORK PRODUCTION SEEN HIGHER
Projections for US commercial pork production indicated an increase in 2020 to 28.55 billion pounds, up almost 1 billion from 2019, Hubbs said. Domestic and foreign pork demand maintained a pace to match production levels.
Pork exports in 2020 look to increase from the 6.5 billion pounds exported in 2019 to 7.3 billion pounds, he said, although uncertainty about tariffs and trade negotiations may hang over hog markets for a while.
Despite retaliatory tariffs, strong exports to China, Mexico and Japan continue to support the export market, he said.
Domestic per capita consumption estimates for 2020 sit at 52.5 pounds, up from 52 in 2019, he said. An average hog price near $72.00 per cwt looks likely in 2020, up from about $68 in the eastern Corn Belt in 2019.
CORN PRICES STRUGGLE
Corn prices continue to struggle with weak demand despite lower production in 2019, Hubbs said, but domestic demand looks to see moderate growth in 2020.
Growth in livestock production and low corn prices provide support for increased feed usage during the 2019-20 marketing year. The potential exists for greater than the 5.275 billion bushels in feed and residual use forecast by the USDA.
Corn for ethanol seems destined for little growth amid flat gasoline demand and exports, he said.
CATTLE, BEEF RECAP
Cash cattle trading was reported last week at mostly $124 to $126 per cwt, steady to $1 higher than the previous week, although mostly at the lower end of the range. Dressed-basis trading was done at mostly $200 per cwt, steady to up $2.
The USDA choice cutout Monday was up $0.51 per cwt at $210.55, while select was up $1.68 at $208.23. The choice/select spread narrowed to $2.32 from $3.49 with 74 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Friday was $146.46 per cwt, down $0.35. This compares with Monday’s Jan contract settlement of $146.02, down $1.57.