Nalivka: Cattle Numbers Indicate Optimism For 2020

African Swine Fever, trade, plant-based protein, flooding in the Midwest, a packing plant fire – all led to market uncertainty in 2019. But they also represent opportunity and the beef industry is poised for higher prices during 2020. While the focus has been on export opportunities, particularly in the face of ASF in China, reduced cattle numbers will be significant to next year’s cattle market.  Both cattlemen and dairymen rigidly culled herds during 2019 as low prices pressured returns.  For the 2019, I am projecting both beef and dairy cow slaughter to be up 3% from a year earlier and the 5th straight year of increased cow slaughter. Beef cow slaughter will represent 10% of the cows at the beginning of the year. While this is not nearly as high as during 2012 and 2013 when producers liquidated the U.S. cattle inventory to a 60-year low, it is the highest beef cow slaughter relative to the overall herd since 2013. In the face of significant financial stress due to low milk prices, dairy cow slaughter will likely account for 35% of the dairy cow herd this year. This is the highest since 1977.  Remember that period.  It led to the 1984 Dairy Termination Program. Not only were producers culling herds more deeply in 2019, they retained significantly fewer heifers from the 2018 calf crop for herd replacements. Heifer slaughter into mid-October was still up 7% year-to-date and in addition, USDA indicated on their October 1 Cattle on Feed report that…

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