News

Herd expansion ends and should remain short-term

A professor with the Western Illinois University Ag School says the cattle inventory report shows that herd expansion has come to an end and should stay there short-term. Jason Franken tells Brownfield Ag News, “With all the uncertainty coming out of trade deals, and especially with the coronavirus at least in the near term, that’s going to be a disincentive for producers to expand. With the prices I’m looking at it’s going to probably keep things fairly even-keep, I would think.”

He expects cattle prices this year to land in similar ranges as the last couple of years. For slaughter steers, he sees quarterly averages to start at $123 and end at $113.

Franken says domestic beef demand could also be affected, “There have been cases of coronavirus show up in the U.S. And if that did spread to the extent that it even decreased domestic travel and restaurants and such that could have a downward effect on domestic demand as well.”

Franken says there’s another sign that producers are unwilling to keep expanding, “Replacement heifers are down about 2% for beef and one-percent for dairy herds, relative to last year. And, as such, USDA cattle on feed reports indicate that more heifers are being sent to feedlots instead of staying on farm for breeding purposes.”

Franken sees prices for 600-700 pound feeder steers an average of $148 in the first quarter, rising to $154 in the second, then finishing up at $149.