CattleFax predicts positive profitability trends in 2022 – AgriNews


HUSTON – The CattleFax Outlook Workshop, hosted by the 2022 Livestock Convention and the NCBA Houston, shared market and weather expertise.

Cattle prices and profitability trends for producers are pointing in the right direction, even if problems and uncertainties persist due to prolonged disruptions as a result of the pandemic.

Although the problems with work and packaging capacity have lingered, both are expected to improve next year.

This increase in capacity combined with strong global and domestic consumer demand for beef indicates an increase in profitability in various segments, indicating that the market will be healthier and more stable next year, according to CattleFax.

Beef Outlook

Kevin Hood, vice president of industry relations and analysis at CattleFax, said U.S. cow beef stocks had fallen by more than 700,000 head compared to last year and nearly 1.6 million from the cycle maximum. This year the number of beef will be about 30.1 million.

“Drought, market volatility and processing capacity problems over the past year have affected between 30% and 40% of shepherds. At least another 250,000 heads will be eliminated in 2022 without improved weather and profitability, ”Hood said.

The stock of cattle and calves is 675 thousand less than last year, and 25.5 million. Slaughter of cattle for feeding will decrease by 400,000 heads lower than last year and amounted to 25.7 million heads.

Commercial beef production will decline over the next few years, starting with a 2% decline in 2022.

Hood predicted an average price for 2022 of $ 140 per quintal, which is $ 18 per quintal compared to 2021 with a range of $ 130 to $ 155 per quintal throughout the year.

All classes of cattle are expected to trade higher and prices are expected to improve. The price of an 800-pound bull is expected to average $ 172 per quintal in the range of $ 158 to $ 184 per quintal, and the price of a 550-pound bull is an average of $ 205 per quintal in the range of $ 180 to $ 230 per quintal.

Finally, Good predicts that communal cows cost an average of $ 75 per quintal with a range of $ 65 to $ 85 per quintal and breeding cows an average of $ 1,850 per head with a range of $ 1,700 to $ 2,000 to load large numbers of quality cows at an advanced age .

Consumer perspective

Consumer demand for beef at home and around the world remained strong in 2021, and this trend will continue in 2022, especially given that limited global protein supplies are expected to stimulate growth in U.S. exports.

This will also lead to beef prices from final consumers to consumers continuing higher in the coming years.

While the average household income in the U.S. grew in 2021, historically high inflation has most affected low- and middle-income Americans. Inflation is also pushing beef prices to a higher trade range.

The retail price for fresh beef from the U.S. Department of Agriculture this year should average about $ 7.15 a pound, which will eventually lead to a larger margin in the system.

According to Hood, wholesale demand is likely to slow next year, but the value of the exemption should persist at about $ 280 per quintal on average in 2022.

Global demand for protein continues to grow, and U.S. beef exports are expected to grow 5% this year to 3.7 billion pounds. The growth was driven by big growth compared to last year in China, as well as Japan and South Korea, which remain strong trading partners for protein.

“Increasing global protein supplies will support stronger red meat exports from the United States in 2022,” Hood said.

Crop Outlook

Mike Murphy, CattleFax’s vice president of risk research and management, expects summer weather conditions – and their impact on corn and soybean yields – to be the focus of market participants.

In anticipation of normal weather next spring, CattleFax forecasts sown acres of corn at 91.8 million acres with expected yields on the trend line of 180 bushels per acre in the 2022 planting season. It is expected that in the 2022-2023 marketing year the area of ​​soybeans will remain almost stable at 87.2 million hectares.

“China’s exceptional demand is leading to new records for corn exports from the US, and expanding interest could easily boost exports in 2022,” Murphy said.

Murphy noted that the weather is likely to continue to affect hay prices as much of the Central Plains and the West struggle with some level of drought or drought.

“December. Hay stocks 1 on the farm decreased by 6% compared to the previous year and amounted to 79 million tons. Expect hay prices this year to average around $ 186 per ton, which is $ 10 higher than 2021 prices due to tougher supplies and increased demand, ”he said.

Weather forecast

According to meteorologist Matt Mackens, La Niña is still firmly in control of the ocean-atmosphere system, and that is unlikely to change this spring. However, it is possible that some changes will take place during the summer.

For the United States, except for any changes in the La Niña forecast or a sudden warming in the Gulf of Alaska, the drought continues in the southwest and south, and temperatures are rising.

It is expected that the Northern Plains and the Corn Belt this spring will have humidity further east and drier conditions this summer, and temperatures will be closer to normal compared to 2021.

CattleFax CEO Randy Blach ended the session with an overall positive outlook, expecting margin improvements as beef supplies dwindle and producers gain leverage from packers and retailers, beef demand will remain stable with expected use and export growth. in the next few years.

CattleFax predicts positive profitability trends in 2022 – AgriNews

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