Livestock markets face large supplies with strong demand moving into 2019, and 2019 livestock prices look to be similar to this year, according to presenters at the Illinois Farm Economics Summit this month.
2019 BEEF PRODUCTION SEEN UP
US beef production was expected to increase 3.3% in 2019, rising to 27.8 billion pounds, up 0.9 billion over 2018.
However, beef demand remained strong in the second half of this year, and beef cutout prices missed the third quarter slump seen over the last two years.
Beef export markets continued to exemplify US competitiveness in foreign markets, the speakers said. Projections for beef exports sit at 3.265 billion pounds, up from 3.19 billion in 2018.
Recent strength in export markets came from strong demand in Japan, South Korea, Mexico and other Asian markets, the speakers said.
And, domestic per capita beef consumption was expected to increase in 2019 to 58.5 pounds, up 1.5 pounds from 2018, they said.
Fed cattle prices look to move higher in the first half of 2019 on strong demand, the speakers said. Fed cattle prices averaged near $117 per cwt on a live basis in 2018 but look to average near $118 in 2019.
Feeder steer prices, though, averaged $148 per cwt in 2018, yet current projections place 2019 prices near $145.
2019 PORK PRODUCTION SEEN UP
Projections for 2019 US pork production increased to 27.7 billion pounds, up 1.4 billion pounds from 2018’s record high, the speakers said.
However, domestic and foreign pork demand are maintaining a pace to match production levels, they said.
Lower pork prices and strong incomes spurred domestic consumption at the end of 2018, and pork exports in 2019 look to increase from 2018’s 5.98 billion pounds to 6.2 billion.
Despite retaliatory tariffs, Mexico remains the top export destination for US pork, the speakers said. Strong exports to Japan and South Korea also continue to support the export market.
Domestic per capita pork consumption projections for 2019 sit at 52.8 pounds, up from 50.6 in 2018, they said.
An average hog price near $42.00 per cwt looks likely in 2019, down from $45.50 in 2018, the speakers said, but stronger prices remain a possibility if demand from China materializes.
CROP PRICES STILL ADJUSTING TO TRADE ISSUES
Crop prices continue adjusting to the current trade environment and large global inventories, the IFES speakers said. Global economic growth appears set to moderate after a prolonged recovery period following the Great Recession.
Growth in many countries in Asia and, in particular, China show signs of weakening as moving into 2019, they said. Prospects for lower growth in many key US export markets may influence demand, but a significant change to current trade policy would mitigate possible losses in export markets.
Barring a shortfall in a major production region or a resolution to trade issues, prices look to remain near current levels in 2019, they said. Price outlooks assume a good 2019 crop season.
CATTLE, BEEF RECAP
Cash cattle traded last week at $123 per cwt on a live basis, up $4 from the previous week, and at $195 dressed, up $5.
The USDA choice cutout Friday was down $0.89 per cwt at $214.41, while select was up $0.30 at $207.52. The choice/select spread narrowed to $6.89 from $8.08 with 54 loads of fabricated product sold into the spot market.
No delivery notices were served for Dec live cattle.
The CME Feeder Cattle index for the seven days ended Thursday, was $147.26 per cwt, up $0.06. This compares with Friday’s Jan settlement of $149.07, up $0.07.