As dairy producers, we tend to focus on milk prices, but it pays to be aware of what’s going on in the beef markets, too. After all, our dairy cattle make up an important part of the U.S. beef supply.
Brenda Boetel, a professor of agricultural economics at the University of Wisconsin-River Falls, shared her 2020 forecast for several commodities, including beef, at the Wisconsin Agricultural Outlook Forum held in Madison, Wis.
“One of the biggest things in 2019 was weather,” she started out. “Another thing that had a big impact on these commodities was export and trade markets.”
Specifically for beef, she talked about the U.S.-Japan Trade Agreement. The bilateral agreement will reduce tariffs on agricultural products, and the tariff on beef will fall from 38.5% down to 9%. “That will put the U.S. on level trading with countries in the Trans-Pacific Partnership,” Boetel said.
“That has a very big impact for beef markets because Japan is our number one export market for beef in the United States,” she continued. “They take about 28% of our exports.”
In 2019, beef exports were down 4.2%, but Boetel told the audience to not be too pessimistic about that. “It is still very strong,” she said. “We’ve had record years of beef exports, and you can’t have record years every year.”
Speaking of records, beef production will be up about 1% in 2020, which would be a chart-topping level of production. Pork and poultry are also expected to have record production years in 2020.
For now, the economy is doing well and there is strong demand for both beef and pork in the U.S. Consumers are continuing to eat protein, particularly beef, which is the higher priced protein, Boetel noted.
Trade is also a good thing, she said, which keeps demand and prices strong.
Looking at 2020, “The biggest thing for these commodities is trade,” she said.
“We also have to pay attention to a recession because it has a big impact, particularly for beef producers,” Boetel added. Beef is more expensive for consumers to buy, so recessionary tendencies impact beef markets significantly, she explained.