Markets
that this is looking like a unique cattle
cycle. History might suggest that after
herd growth stops, herd declines will
follow. But the ingredients for near-
term herd declines are not obvious at
this point. Prices have mostly remained
at or above profitable levels for cow-
calf producers which does not provide
much incentive for liquidation.
Beef Demand
While larger supplies will remain the
biggest headwind to stronger prices in
2019, strong domestic and international
demand for U.S. beef is continuing
to provide price support. A strong
domestic economy is supporting beef
demand despite the larger supplies of
beef and also larger supplies of other
proteins chicken and pork. Domestic
beef consumption per person in 2018
was about 57 pounds and is forecasted
to grow slightly in 2019. Internationally,
robust exports have supported the
demand profile for beef and, therefore,
cattle. Beef exports have risen by
over 20 percent over the past 2 years
which has helped absorb some of
the beef production increases. More
modest export growth is forecasted
for 2019, but it is worth noting that
the modest forecasts the past two
years have been sharply exceeded.
Summary
The past few years have been a
demand-driven environment where
stronger-than-expected beef demand
led to stronger-than-expected calf
and yearling prices. These have been
important transition years that coped
with the sharp supply increases. Looking
ahead, slower herd growth numbers
begin to paint a brighter price picture
for 2019 and 2020 if domestic demand
and exports continue to grow. I
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