The 2019 beef market prices were disappointingly low, particularly in the second half, with a slight strengthening at the very end of the year.
While production has increased for the past several years, OSU Extension Livestock Marketing Specialist Dr. Derrell Peel expects to see a plateau in 2020 with modestly higher prices.
“The beef industry has been in expansion mode since 2014, and that continued in 2019,” Peel said. “Cattle numbers were up a little bit at the beginning of the year from last year, beef production continues to grow. So we put more beef on the market.”
According to Peel, even though recent trade agreements haven’t gone into effect yet, the markets reacted well to the news in general.
“At least from the standpoint of the psychology of the market we removed a lot of uncertainty with USMCA, with the Japanese agreement, and now with the idea that we probably have at least a phase one deal with China about to go through,” Peel explained. “We have very good beef demand and have had really for the last three or four years, as we have increased production for the most part we have matched that with increasing demand both domestically and internationally, the bulk of the time.”
Domestic beef consumption has been growing since 2015, according to Peel.
“If we produce more we're going to eat more,” Peel said. “The question of course economically is, at what price, right. So if demand is weak, we'll eat it all but we'll do it only at significantly lower prices.”
Looking ahead into 2020, if exports actually continue strong, we may see a decrease in domestic consumption because of the expected plateau in production, according to Peel.
“In value terms we export quite a bit more than we import, because we tend to export higher value products, for the most part, at least on average,” Peel explained. “We eat a lot of hamburger in this country, more than anybody else in the world, and we use that imported meat to actually complete our supplies of ground beef.”
According to Peel, imports and exports are both about 10 percent of U.S. production.
“Obviously we've been through a lot of uncertainty from a political and trade policy standpoint the last couple of years,” Peel said. “With that picture looking better now, our exports in 2020 should pick back up over 2019, a little bit.
Peel said two things that are watched closely are the general economy and total supply of other meats, both of which can affect the beef market. With unemployment low domestic demand is expected to stay steady. The African swine fever has wiped out nearly 20 percent of the world-wide pork population, creating a demand for meat exports.
“We will see record total meat supplies in the U.S. in 2020 again,” Peel said. “But on a global scale, there is basically a shortage of meat right now.”
While the international shortage has created a need for mostly pork and poultry, Peel said the beef industry will see some of the demand as well, hopefully helping the market.