From the Ground Up: Optimism for Beef Producers in 2020

Published: Jan. 23, 2020 at 8:45 AM CST
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Some experts are optimistic about the prices ranchers may be receiving for the calves that they sell this year. Part of what’s fueling this optimism is a strong demand for U.S.beef, both here at home and abroad. David Anderson is a Professor and Texas A&M AgriLife Extension Economist.

“I’d probably argue that we’ve got the best consumer demand for beef in at least twenty-five years, not only domestically, but we’ve got pretty good export demand too. And so if people are buying our product, they want to buy our product then you’re sure set up to be in a lot better position than the opposite being true.”

The hope is that calf prices in the fall of 2020 will be better than those last year.

“So a big explanation for lower prices in 2019, particularly in the fall, there were a lot more calves on the market. So we had more animals for sale. We sort of coincided with the bottom of the fed cattle market. It sort of hit at the same time. And you know if fed cattle prices are lower, people are going to bid less for calves.”

Growing season problems in the Midwest led to higher corn prices last fall.

“I expect lower feed costs than 2019. The big thing is do we return to a kind of normal growing season in the Midwest where so much of the feed is grown, but I would expect my projections would include that, which means there’s going to be a lot of corn, continued low prices, lower than in the fall of ’19.”

Anderson believes we’ve hit our peak in cattle numbers so there’ll be no growth in the number of calves for sale this year.

“We have a cyclical industry. We have a peak in numbers of cattle but there’s an opposite cycle and that’s price. So as we hit that peak we hit the trough in price. And as cattle numbers start to dip, prices go up and I think we’re right on the cusp of that happening and I think it’s a fair conclusion to be pretty optimistic about this year.”