Beef Buzz News
Kevin Good Predicts Continued Strong Demand, Higher Prices In 2020
Fri, 07 Feb 2020 11:25:21 CST
In this week's Beef Buzz, Kevin Good, VP of Industry Relations and cattle market analyst for CattleFax, talks with Radio Oklahoma Ag Network Farm Director, Ron Hays about the latest market forecast for 2020.
Good made headlines during the annul market outlook seminar at the cattle industry convention in San Antonio Thursday when he said beef prices the past 20 years have gone up at twice the rate of inflation, putting more dollars into the cattle producers' pockets.
"We're getting a bigger piece of that (consumer) pie compared to pork and poultry," Good said. "That's good messaging!
At the same, Good said we need to be aware of what the consumer is telling us.
"We have a consumer that is looking for a higher quality, more consistent product," said Good.
He added the consumer is interested in sustainability, humane treatment of the cattle and traceability.
Digging deeper into the data, Good said from 1980 to 1998, the total cattle herd was cut by 20 million head, and beef value, or the money coming into our system, was increasing at 1.3 percent a year. The inflation rate during that period was 4 percent per year.
"So, we were behind all the way through that time frame," Good said, "which meant cattle prices were flat, leading to that big draw down in the total herd."
During the last 20 years, just the opposite trend has occurred, Good said
"We've got a higher quality, more consistent product and we're doing a much better job of messaging to the consumer."
The CattleFax analyst said we've entered the year with more cattle on feed than a year ago but that should not be a negative factor.
"We are going to harvest more cattle at heavier weights, leading to about a 2 percent increase in beef production.
"Fortunately we've got a balance of trade that will take about half of that production increase off the market, and with population growth, per capita supplies really aren't going to be that much different than a year ago.
"Couple this with stronger demand and that's why we expect higher prices," Good said.
Specifically, Good is predicting fed cattle prices to average $120, yearlings and calves to trade $6-$7 higher and cull cows to be $6 higher compared to a year ago.
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