Annual Market Outlooks

2021 Livestock Market Outlook Roundup

Wed, 05 Oct 2022 18:44:12 GMT

The editors at AgWeb.com are looking at experts’ projections for a variety of commodities in 2021 to help you succeed and be profitable in the coming year. Here’s a look at what analysts are expecting for the upcoming year in the protein segments.

2021 Beef Outlook: New Challenges, New Opportunities

(Farm Journal)

Disruptions to the beef industry from the COVID-19 pandemic will likely linger into 2021, but the result may not be all bad for producers, Don Close, animal protein analyst at Rabo AgriFinance told AgriTalk.

Read more.

U.S. Pork Outlook: Will 2021 Be Different?

(Farm Journal)

Five respected economists in the pork industry share their insight on what’s ahead in 2021 and ways producers can make the most of new opportunities ahead.

Read more.

2021 Milk Price Outlook: Throw the Crystal Ball Out the Window

(Farm Journal)

Government intervention creates a level of uncertainty that makes a 2021 milk price forecast nearly impossible.

Read more.

Cattle Outlook Optimistic for 2022

Thu, 30 Dec 2021 16:00:54 GMT

Optimism is building in cattle country that 2022 will finally deliver a long-anticipated bull market for cattle. Ranchers and cattle feeders saw markets turn higher in the final weeks of 2021, and while many of the challenges facing the industry last year will continue, most analysts suggest improving prices are a trend that will continue beyond this year.

“Demand for beef, both domestically and in our exports markets, was strong throughout 2021 and will continue,” says John Nalivka, Sterling Marketing, Vale, Ore. “With declining cattle numbers, we’re seeing things fall into place for better cattle markets the next couple of years.”

Market-ready supplies of fed cattle have tightened and packers are actively chasing cattle for the first time in many months. In general, cattle prices are higher now compared to a year ago and are expected to continue improving in 2022.

(Farm Journal)

Such sentiment is shared by industry analysts across the country who see robust demand continuing as the industry has worked through many of the pandemic-related challenges. CattleFax CEO Randy Blach said the cattle cycle should have seen a peak in 2020, but it was pushed back by pandemic-related slaughter bottlenecks.

“This has been a long, hard-fought battle,” Blach said. “Retail beef prices have gone up substantially and demand has been out of this world. Cattle prices just haven’t shared in that move up until now.”

Demand has been very strong for all proteins, including pork and poultry, he said.

“All the proteins have benefitted from this demand push that we’ve experienced.”

Demand may be good, but tightening supplies are the primary factor influencing analyst’s optimism.

“Cattle numbers are declining as low prices and drought have both led to herd liquidation over the past two years,” Nalivka says.

In fact, U.S. beef cow slaughter was 10% higher in 2021, and that followed a 3% increase from 2020.

“We saw the highest beef cow slaughter last year since the drought year of 2011,” Nalivka says. “From 2011 to 2013 the drought, beginning in the Southwest and moving to the Midwest, pushed the beef cow herd numbers in 2014 to its lowest point since 1952.”

With dairy cow slaughter up roughly 3% in 2021, total cow slaughter posted a 6% increase and the highest since 1996. With those slaughter numbers, Sterling Marketing projects the 2022 beef cow inventory to be 30.2 million, a reduction of roughly 1 million cows, or 3%.

Additionally, heifer slaughter in 2021 was the highest since 2011. Nalivka projects 2022 heifer slaughter to be 4% lower than 2021 and just marginally higher than during 2012.

“The higher beef cow and heifer slaughter numbers that we saw in 2021 mean reduced cattle numbers for 2022 and likely through 2024 are evident,” Nalivka says. My forecast for the January 1 total cattle inventory is 91.25 million, down 2% from the beginning of 2021, the lowest since 2015, and 475,000 more than the beginning 2012 cattle herd.”

A reduction of the breeding herd will translate into a reduction in cattle slaughter. Nalivka expects total slaughter to be down 2% in 2022 after the 3% increase found in 2021.

“I also expect carcass weights to decline this year as fed cattle numbers decline and feedlots are increasingly current with showlists and marketing cattle into a stronger market,” Nalivka said. “Assuming a 1% year-over-year drop in carcass weights, beef production in 2022 will be down 3%.”

Overall, Nalivka projects the total red meat and poultry supply, per capita, to decline about 0.5% to 220.7 pounds in 2022.

“Even if demand weakens somewhat, prices across the beef complex – including fed cattle, feeders and calves – will post notable gains during 2022,” Nalivka says. “That is further supported by global beef demand.”

In fact, beef export values soared last year and were expected to exceed $10 billion, according to USDA.

Beef exports reached 115,709 metric tons in October, up 7.5% from a year ago, while export value climbed 48% to $956.9 million – the second-highest total on record, behind August 2021. Through the first 10 months of the year, beef exports totaled 1.19 million metric tons, up 17% from a year ago. Export value increased 38% to $8.53 billion, surpassing the 2018 record ($8.33 billion) with two months to spare.

U.S. Meat Export Federation president and CEO Dan Halstrom acknowledged red meat exports face transportation challenges and rising input costs, yet he expected red meat exports would reach about $18 billion in 2021.

“While global demand is tremendous and we are cautiously optimistic about further growth in 2022, supply chain pressures are not easy to overcome and are a growing concern for exporters and their international customers,” Halstrom said.

2021 Beef Outlook: New Challenges, New Opportunities

Tue, 22 Dec 2020 22:30:32 GMT

Disruptions to the beef industry from the COVID-19 pandemic will likely linger into 2021, but the result may not be all bad. That’s the assessment of Don Close, senior animal protein analyst at Rabo AgriFinance.

“We are set up for an incredibly interesting, but challenging year,” Close told AgriTalk host Chip Flory Wednesday, Dec. 9. “We have a large inventory of cattle in place for the first and early second quarter (of 2021). But because of the contraction in cow inventory we’ve had for each of the previous two years, the calf crop going forward is smaller.”

Close said that lower inventory of calves from 2019 and 2020 will show up in on-feed inventories beginning in late-spring of 2021. That will result in some counter-seasonal prices for fed cattle.

“I think it’s likely the October (2020) cattle on feed number will be the largest on-feed inventory we see for the next several years,” Close said. “We could be setup for a counter-seasonal year where we don’t see the highest prices (for fed cattle) in March and April. As fed cattle supplies tighten (in 2021), we could actually see third and fourth quarter (2021) prices exceed our second quarter highs.”

For cow-calf producers, Close said the smaller supplies of feeder cattle will support prices, but his biggest concern is the expanding drought conditions across the western United Sates that he believes will “further accelerate the liquidation of cows. I’m not sure that’s all bad, because it will get us to the bottom of this cycle in the market faster.”

Flory noted the coronavirus pandemic caused major disruptions to the meat packing sector, notably from lant closures and slowdowns that created a “backlog” of cattle in feedyards. He asked Close if there remains a supply hangover.

“In May (the industry believed) there was one million head of fed cattle backlogged,” Close said. “I agree with that assessment, but by September and October that backlog was pretty well resolved. But, we have a second wave we’re going to have to deal with.”

The second wave of cattle was created by the backlog of cattle outside of feedyards at the time the pandemic hit that were delayed going on feed. Close said those cattle showed up in heavy placement numbers from June through September and resulted in a record number of cattle on feed in USDA’s October 1 report.

“That will be our fed cattle supply from late December and working through the first quarter and into the second quarter of 2021,” Close said.

Flory asked Close if he foresees a repeat performance ahead similar to the disruptions at experienced by packing plants at the outset of the pandemic.

“It won’t be anything nearly as disruptive as it was the first time (if it occurs),” Close said. “The reasons are that packers have the PPE equipment in place, and in the aggregate we know so much more about handling the disease and how it spreads than what we knew initially. Also, the packing plants have made adaptations – monitoring staff, taking employees out of high-risk situations, etc.”

The North American Meat Institute says the packing industry has spent over $1 billion on equipment and alterations in response to COVID-19, and Close believes that takes a degree of risk out of the fed cattle market for cattle feeders.

“We’re still dealing with a degree of uncertainty, but if you look at this entire stay at-home period, beef demand has been incredibly good, in part because of the increase in disposable income,” Close said.

The pandemic shuttered many restaurants, but it also drove consumers to buy more beef at retail and many consumers increased their home cooking skills. Close said while that demand shifted from food service to retail, many consumers found they had more disposable income. Unemployment rose due to the pandemic, but for those who didn’t lose their jobs but were forced to work from home, expenses were reduced for items such as fuel for transportation to work, work lunches and even office attire.

“Many are using that disposable income to eat better at home,” he said.

Once the pandemic ends, Close believes there will be a lot of pent-up energy that will drive a boom in restaurant eating again.