There is one thing for sure in the beef markets: The crystal ball is hazy.
Or at least that’s what two analysts conveyed during a session at the American Farm Bureau’s annual convention. It’s being held virtually this year.
Michael Nepvuex, an economist at the AFBF and Dr. Derrell Peel, an agribusiness professor at Oklahoma State University, shared where the 2020 beef markets took producers and what they might expect in 2021.
The coronavirus impacted every aspect of the beef market. The changes included consumers switching from eating out to shopping for their meat at the grocery store. However, Dr. Peel says data shows the cattle and beef markets ended 2020 on a positive note, which many did not think would happen.
It’s apparent that effects of the pandemic shock continue in 2021. Peel added market factors this year could include the widespread drought in the western part of the country and higher feed prices.
Nothing is clear in Beef Markets
“The 2021 market trajectory is uncertain,” Peel says. “I have no strong predictions at this point—we just have to watch.”
When it comes to beef production, Peel says he expects the cattle slaughter rates to decline and reduced carcass weights. He expects a 1% to 2% decrease in beef production.
Peel says he expects beef demand to remain strong in 2021 and the focus to continue on grocery stores. One key factor for 2021 is the unemployment rate. He says stimulus checks help retain beef demand.
He expects pork and poultry supplies to be abundant this year.
In the global protein markets, Peel says he expects strong beef exports in 2021. He says the Asian markets remain strong with continued growth in China. Another area to watch is Mexico who has also experienced economic woes. If the recovery starts there, then the beef market will recover there. Overall, he expects beef imports to moderate.
Peel says the beef markets could finish significantly higher than 2020 if the second half of 2021 picks up steam and the pandemic is under control. However, he is quick to point out it all depends on the degree of pandemic control and the macroeconomic conditions in the United States.
Nepvuex says it’s hard to know what to expect in the changing markets. He urges producers to mitigate their risk, not just because of COVID-19, the weather or the economy, but also the changing landscape in Washington, D.C. with a Democratic president and Democratic-led Congress.
The impact of rising corn prices on beef herds was brought up by an attendee. Both Peel and Nepvuex agreed corn prices could impact the markets. However, it depends on the crops and growing conditions this spring. Peel expects feedlots to look at the kind of cattle they are raising as far as weights and might even give a little extra for proven genetics, if corn prices continue to price. In the end, it will mean tighter profit margins and higher beef prices for the consumer.