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COULD CATTLE                                                                           The Midwest Cattleman · September 14, 2023 · P12
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                                         that we're beginning to see in
      geography with expertise in        the marketplace."
      grains, livestock, and policy.        Brown says economists are
                                         still concerned about the lack
      Cattle Prices Could Climb          of profitability currently pro-
         Continued consolidation in      jected for pork producers, but
      livestock is a major concern       they are turning more opti-
      for economists.  The survey        mistic on prices.
      was completed on the heels of         "As we've done the last
      Tyson Foods and Smithfield         couple of months, prices have
      announcing plant and farm          recovered and economists'
      closures for both pork and         outlooks have gotten a little
      poultry. However, economists       brighter, even though we're
      think consolidation in cattle      talking about some fairly low
      will also be a major theme in      prices. Dairy is the one that  cattle. So the idea is that these  $125 billion to $130 billion.
      2024, and it could have an im-     still sticks  out  as the worst,  industries are going to contin- According to Brown, that’s not
      pact on major meat processors      and our survey basically shows  ue to adjust. And I think 2021  the record $160.2 billion U.S.
      as ag economists think cattle      not a lot of change for prices  and 2022 were just such phe- agriculture saw two years ago,
      prices could push even higher,     with a projected $20 (per cwt)  nomenal demand years that  but Brown points out that it’s
      a trend that could continue for    for the all milk price forecast  they almost masked what  still high.
      at least another year.             for the next 18 months or so. If  were some very high costs             “It just reminds me to say
         The  August survey also         the costs stay where they are  faced by all of the segments of  not as good as where we were
      asked economists when they         today, it makes that a pretty  the livestock industry."              a couple of years ago, but also
      think cattle herd expansion        tough industry to participate                                        maybe  not  as  tough as  some
      will start to take place.  The     in.”                               Consolidation Concerns            would have thought once we
      majority think cattle contrac-                                          The survey also asked econ- started to see these lower
      tion will continue for at least  Massive Consolidation?               omists to explain the reason- prices,” says Brown.
      another year.  A smaller per-         What  factors  could  impact  ing behind their herd expan-
      centage think it could happen  livestock prices over the next  sion forecasts. Consolidation  Corn vs. Soybeans Price
      in the second quarter of 2024.   six months? The main theme  was also a major theme as  Projections
         "It will probably be late  continues to be tighter cattle  economists explored what the                 Ag economists are more op-
      2025  or  2026  before  we  see  supplies and demand.                 current state of the cattle in- timistic about soybean prices
      significant increases in beef         •"Beef cattle supplies will  dustry could mean for the fu- than they are corn prices, and
      production. So if demand at  continue to tighten, and beef  ture of agriculture.                        one of the main reasons is de-
      all stays with us, we can be  production will continue fall-            •"I do think consolidation  mand. According to the latest
      talking about these kinds of       ing. Beef demand remains re- of all parts of the beef indus- Monthly Monitor, economists
      lofty prices for several months    markably resilient," says one  try is coming. I think this will  indicate soybean prices will
      down the road," says Brown.        ag economist.                      be a time when some of our  trend higher not just this year
      "I kind of wonder when we             •"Factors impacting live- well-established 100-cow  op- but also for the 2024/25 crop.
      talk about changing structure      stock prices include U.S.  erations will think about exit- For corn, the survey shows the
      whether or not the cow-calf        herd liquidation, global meat  ing," says one economist.             opposite with the expectation
      industry will look different. So   availability  and domestic de-       •"We will see prices that  for corn prices to fall.
      maybe bigger operations, per-      mand,"  says another econo- significantly surpass 2014-                 "On the crops side, the
      haps some of the smaller beef      mist in the anonymous survey. 2015. Processing plants will  one to be optimistic about
      cow operations will have re-          •"Consumer           demand consolidate due to fewer cattle  is  soybeans,"  says  Brown.
      tired. And we won't see those      will impact livestock pric- available to process.  Produc- "According to the latest  Ag
      back. So I’m curious to watch      es the most in the next  ers will be slower to expand  Economists’ Monthly Moni-
      consolidation, what's been         six  months,"  the survey re- than in 2014-2015 because of  tor, economists say soybean
      probably the slowest segment       veals.                             continued drought and high- demand is certainly stronger
      of agriculture to consolidate         "We asked folks a lot about  er borrowing costs. I expect  than we might see in a com-
      over time."                        what they see as important  the high prices to last longer  modity like corn, as biofuels
         The survey shows ag econo-      in the livestock markets as  than in 2014-15," says anoth- and renewable diesel will all
      mists think cattle prices could    we  look  ahead,  and  we  did  er economist.                        continue to maybe drive some
      climb even higher over the         see that consolidation word          •"Further reductions in  crushed demand as we look
      next year.                         come up, especially in cattle  slaughter will put continued  ahead."
         "Not only have cattle pric-     markets," says Brown "So al- pressure on beef processors                Brown says, as a result,
      es been moving higher, but         though we're talking about re- while boosting prices for cat- economists are also more opti-
      our economists have been up-       cord cattle prices, and maybe  tle producers," one economist  mistic on soybean prices mov-
      ping their estimates of cattle     at  some  point  record  profit- says in the anonymous survey. ing forward compared to corn.
      prices to the tune of about        ability, although not today, I       •"The impact of the small- Part of the concerns are due
      $10 [per head] over the last       think there's a lot of concern  est beef cow herd in 60 years  to an expectation for yields to
      couple of months," says Scott      about what this does for the  will  likely  put  pressure  on  increase, but the other is the
      Brown, interim director of the     industry long-term.                processing and retail mar- negative outlook for demand.
      Rural and Farm Finance Poli-          "I think packers are going  gins, may give a more compet-            “On the corn side, a little
      cy  Analysis Center who also       to be in an awful difficult spot  itive advantage to competing  less optimism. I would say
      helps author the  Ag Econo-        here for a period of time,"  proteins, and could result in  weak demand in exports, in
      mists’ Monthly Monitor. "So        Brown adds. "Feedyards could  a smaller industry going for- particular, seem to be a lot of
      a lot more optimism. I think       also be in a tough spot. It's  ward," one economist says.            what we have answered back
      that just has a lot to do with     tough to keep yards full with        The ag economists surveyed
      the short supplies of cattle       the lack of supplies of feeder  expect net farm income to hit                      continued on page 14
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