Prepared and written by Jeff Swenson of DATCP.
There are plenty of year-in-review type stories and more than plenty 2020 predictions. Most point to the trade agreement Japan, which cuts tariffs on US cheese, wine, beef, pork, and almonds as a win for US agriculture. Progress on the Phase One deal with China, which is to be signed by President Trump on January 15 will see more US pork, soybeans, beef and ethanol heading to that country. It also appears that the USMCA agreement will go into effect early this year. It may take some time before the impacts (larger export sales) materialize, but it seems we start 2020 closer to making that a reality. The United States has increased meat and poultry production 2.5 percent per year each of the past five years. We will concentrate on supply and demand news and indicators in this week’s Market Update.
Cow slaughter numbers were large in 2019, and there weren’t indications of large scale liquidation. Admittedly Wisconsin did see a decrease in dairy cows (7,000 head,) but dairy cow numbers nationally were unchanged. From a beef production standpoint, beef breed cow slaughter numbers indicate herd expansion is over. Furthermore, Rabobank’s Beef Quarterly Q4 2019 report noted that for the second half of 2019, “heifers as a percentage of cattle on feed and heifers as a percentage of the fed slaughter mix have been in the range of 38 to 40 percent, levels that suggest the herd is no longer growing.” Rabobank reports that beef production in 2020 will be less than one percent higher than 2019. We do start 2020 with a large number of cattle on feed. The December 20, 2019 Cattle on Feed report estimated 2 percent more head in feedlots than a year ago. While the 2 percent increase was in line with industry estimates, cattle placed into feedlots came in at 105 percent compared to same period last year, and that was at the higher end of expectations. Demand will be key to working through the cattle currently on feed. Domestic demand has been strong, and we’re coming off a good holiday season for beef. Rib demand is expected to back off after the holidays with consumers generally switching to roasts and ground beef for the first quarter, and this year has been no exception with rib primal prices dropping 23 percent. The most recent Cold Storage report shows frozen beef stocks 7 percent below a year ago. The lower stocks of beef were offset by pork, however with red meat stocks 2 percent higher than a year ago.
Growth in Wisconsin hog production is outpacing the national trend. The USDA, in cooperation with DATCP’s Wisconsin Agricultural Statistics Service release a Hogs and Pigs report on December 23, 2019. According to the report, there were 365,000 hogs and pigs on Wisconsin farms on December 1. That’s up 14 percent from December 2018. Breeding hogs totaled 60,000 head (up 36 percent,) while market hogs accounted for 305,000 head (up 14 percent) of the total inventory. The annual pig crop was 1,085,000 head, up 29 percent from the previous year. The pig crop was the result of 99,000 sows farrowed in the state from December 2018-November 2019. Not only did more sows farrow in Wisconsin, but average pigs saved per litter was 10.96 – a record high. Nationally, total hogs and pigs on December 1, 2019 was 77.3 million head, and that’s’ up 3 percent. Breeding inventory in the US was up 2 percent and market hog inventory was up 3 percent. Pork in cold storage is up 13 percent compared to a year ago with production outpacing demand. Mexico and China have been buying pork from the US, but volumes shipped to those countries will increase when trade agreements go into effect –there is no doubt the US has plenty to sell.
Grain futures have been moving higher since news of a trade agreement with China was announced. Soybeans, ended the year at their highest price since June 13, 2018 and up 6.8 percent on the year. According to Allendale, Inc., Corn ended the year up 3.3 percent. The USDA will release their much anticipated January crop production report on the 10th.
A coworker who has dairy contacts throughout the country forwarded me a notice from a New York auction market stating that, due to no demand for light dairy calves, they will no longer accept calves weighing 70 pounds or less.
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