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Randy Blach of CattleFax Alan Newport
CattleFax CEO Randy Blach gave a guarded, but generally positive outlook for the beef industry in 2019.

Beef outlook good, but some price erosion

Strong demand and exports have overcome huge meat supplies. That has supported prices at potentially profitable levels.

Improved demand, a strong economy, growing exports and greatly increased protein consumption by consumers in the US built the foundation for a positive 2019 outlook from CattleFax.

In the annual outlook seminar CattleFax presents at the National Cattlemen’s Beef Association convention, CEO Randy Blach gave the beef industry a verbal pat on the back. He showed graphics defining improved consumer demand since 1998 and the improvement in Choice and Prime beef products as a response to consumer demands after years of quality problems and slipping demand many years prior.

“We finally started listening to the consumer and the consumer rewarded us,” he said.

In fact, without the demand improvement, calf prices would be $50 per hundredweight lower and fed cattle would be $20 per hundredweight lower than they currently are, he said.

Blach also noted when the beef industry was on harder times during the great demand slide, the entire industry was divvying up a total $50-100 profit. Now the entire industry is divvying up more like $500 he said, although he also noted the profit margins for each segment vary greatly.

He also offered the audience an interesting analogy on how important exports remain to the US beef industry. CattleFax estimates the current value of US exports is $360 per fed animal – a little higher than last year – and the group is forecasting a 6% increase in exports this year.

So what would happen, Blach asked the crowd, if CattleFax turns out to be wrong and the exports actually slip 4% instead of gaining 6%?

It would result in a decline of $4 per hundredweight in overall beef cattle pricing, he said.

Overall, the group expects a little price slippage for beef in the face of record beef and pork supplies and near-record poultry supplies. The positive side of the equation is the potential for a wetter spring and summer across the majority of the country and lower prices for hay, with feed prices remaining close to current levels.

Graph of consumer income

For the year, CattleFax is projecting fed steers will be steady at an average price of $117 per hundredweight, with a range of $100-120.

The group expects 750-pound feeder steers to be down $3 from the 2018 average at $147 per hundredweight, with a range of $130-160.

The analysts said 550-pound steers will be down $9 from last year at $164 per hundredweight average, with a range of $140 to the mid $180s.

They expect slaughter cows to remain under pressure from the ongoing dairy operation liquidation, and say this could put pressure on bred cows.

Analyst Mike Murphy said the likely range for corn the first half of the year is $3.60-4.10.

TAGS: Marketing Beef
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