Cattle producers face more price pressure for at least another year before cyclical transition offers support, according to the U.S. Baseline Outlook Report Update issued by the Food and Agricultural Policy Institute (FAPRI) at the University of Missouri (MU).
FAPRI estimates the Five Area direct average fed steer price this year at $116.58 per cwt., falling to $113.64 and $113.83 in 2020 and 2021, respectively. After $116.72 in 2022, prices increase from $121.28 in 2023 to $130.29 in 2028.
For feeder cattle (basis 600-650 pounds, Oklahoma City) FAPRI pegs prices at $153.61 this year. The next three years (2020-2022) estimates are $145.28, $149.66 and $154.20. After 2022, prices are forecast at $163.61 in 2023, then increasing to $181.35 in 2028.
In the meantime, cow-calf returns continue under pressure from cyclically high cattle numbers, according to Scott Brown and Daniel Madison—MU Department of Agricultural and Applied Economics, in the FAPRI companion update for livestock and dairy markets.
“Though pasture and range conditions have been much improved this spring and summer relative to previous years, cow-calf returns have reached the lowest level in a decade as feeder steer prices decline with cattle on feed numbers continuing to exceed year-ago levels,” say Brown and Madison. “Fed steer prices had been steady for most of the first half of the year, with recent weakness noted, due to the Aug. 9 fire at a Tyson cattle processing plant in Kansas. This has strained already tight beef packing capacity, resulting in higher beef prices along with depressed demand for cattle. Cattle and beef prices will remain under pressure as beef production grows through 2020. Good domestic demand for beef, particularly higher-quality product, continues to prevent even larger price declines.”
For recent perspective, the World Agricultural Supply and Demand Estimates (WASDE) for September project beef production for this year at 26.95 billion pounds, which would be 81 million pounds more (+0.30%) than last year.
Beef production for next year is estimated to be 2.66% more than this year at 27.67 billion pounds.
Projected total red meat and poultry production next year of 106.78 billion pounds would be 2.18 billon pounds more (+2.10%) than this year’s forecast. Keep in mind forecast total red meat and poultry production this year of 104.60 billion pounds is 2.12% more than last year.