OVERALL OUTLOOK FOR EXPORTS POSITIVE IN 2021
Based on how the export market responded in 2020, Dennis said, the overall outlook for exports in 2021 appears positive, but in the first quarter, the domestic market will have to do much of the work.
"Historically, the number of beef export sales has been seasonally lower in the first quarter," he noted. "Since 2002, 2020 was the only time export sales were seasonally higher in the first quarter -- even correcting for lower export sales in May and June [of 2020] by setting them to their 10-year averages."
China will continue to be the major driver for U.S. beef export markets, Dennis said. The U.S. supplied less than 1% of the country's total beef imports in the second half of 2020. The USDA forecast anticipated increased demand by China for animal proteins and noted the commitment to purchase an additional $200 billion in American-made goods and services over the 2020 and 2021 years under the U.S.-China Phase One trade deal, which may lead to continued growth in beef exports.
DOMESTIC MARKET DRIVERS
For the immediate future, Dennis pointed to the domestic market as the most likely market driver, as the country continues to work through wholesale meat supplies in the first quarter of this year.
That may be a challenge based on the most recent USDA Livestock, Dairy and Poultry Outlook. The report forecasts a 1% decline in per capita disappearance of red meat for 2021, about the equivalent of about 111 pounds. The decrease in availability is tied to greater expected exports and fewer beef imports to the U.S.
The fourth-quarter 2020 forecast for beef production was revised down 80 million pounds on lower slaughter. Annual production is forecast at 27.2 billion pounds, unchanged from 2019. While 3% fewer cattle were slaughtered, heavier carcass weights offset this. The 2020 annual average price for live steers in the 5-area marketing region averaged $108.51/cwt, down 7% from 2019 levels.
Beef production for 2021 is forecast to hold around the 27.2-billion-pound mark, even as fed cattle supplies trended down with higher feed costs. Prices for the new year are forecast up, to $115.50/cwt. The first-quarter forecast for feeder steers weighing 750-800 pounds (Oklahoma City National Stockyards) is $134/cwt. Annually, the forecast is at $137/cwt for those feeders.
Nebraska's Dennis added the market's ability to move through supplies is still possibly going to be hindered by meatpacking plant shutdowns and government restrictions on social gatherings this year, meaning the full impact of COVID-19 can only be guessed at for now.
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The Link LonkFebruary 09, 2021 at 12:07AM
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Comparing Two Times of Crisis for the Beef Industry - DTN The Progressive Farmer
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