Profitability predicted for U.S. beef sector this year

SAN ANTONIO, Texas — The traditional cattle cycle of boom and bust phases may be gone, but volatility is the continuing reality for the beef business. However, the entire U.S. beef chain can expect a profitable 2020, said Cattlefax analysts at the National Cattlemen’s Beef Association convention held in San Antonio, Texas, Feb. 4-7.

“When we look at 2020, all industry segments will be profitable,” said Cattlefax chief executive officer Randy Blach.

He anticipates that about US$500 per head profit will be split among industry players, thanks to continuing strong demand and escalating exports.

“That is one of the best numbers we have seen in history,” he said.

The best that cow-calf producers could hope for from1980-90 was an average profit of $32 per head, but that improved to a more sustainable level of $239 per head from 2000-16.

Besides producing better beef —80 percent now grades USDA Choice or Prime — exports have also improved steadily, outpacing pork and poultry in the last 10 years.

In 2010, the U.S. exported $4.1 billion worth of beef while pork sales amounted to $4.6 billion and poultry was $3.1 billion. Last year, the U.S. shipped out $8.2 billion worth of product while pork was $6.3 billion and poultry amounted to $4 billion.

While there will be seasonal shifts in live cattle prices, producers can expect a good year.

Cattlefax predicts fed steers will average $120 per hundredweight, ($3 better than last year), 750 pound steers should be $150 per cwt. ($6 over 2019) and 550 pounders will average $170 per cwt. Utility cows should average $65 per cwt. ($5 per cwt. over 2019), while bred cows will be around $1,500 a head. Some of these prices are dependent on corn prices.

Analysts are expecting an increase in corn acres to 94 million aces with spot corn prices ranging from $3.50 to $4 a bushel.

About 7,000 people have gathered for the annual convention held in San Antonio, Texas.

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