Key Cattle Market Themes for 201407 January 2014
Glynn Tonsor, Agricultural Economics Professor at Kansas State University, advises cattlemen to be ready for uncertainty and the unexpected.
This extends beyond the cattle sector into outside markets and government policy issues. Also, beef household consumption is tipped to continue adjusting.
Professor Tonsor's key things to watch for 2014 are:
Uncertainty “outside” the cattle industry to persist.
- While weather uncertainty may have improved over the past several months, multiple topics including federal budget debates, regulations, farm bill details, and a host of other issues beyond the control of individual producers continue to underpin an environment of higher uncertainty than most producers are likely comfortable with. This uncertainty in 2014 will reduce and delay investment (e.g. constrain expansion of the beef cow herd) as well as decrease desire to “stay the course” by some entities operating in sectors with excess capacity concerns (e.g. feedlots and processors).
The unexpected to become typical.
- While it is nearly impossible to predict events such as the beta-agonist use controversy (recall the surprise debate in 2012 around lean finely textured beef), producers are encouraged to recognize the trend of the public asking more questions about how their food is produced is likely to continue. Along with this trend is an increasingly complex situation around new technology development, adoption within the industry, and acceptance by the public. The entire food production system will continue to struggle with this.
Composition of beef consuming households to continue adjusting.
- As per capita beef supplies hit historically low levels in 2014 the make-up of households remaining active beef consumers will change. That is, there will not be a uniform reduction of consumption across all prior purchasers. Understanding this not only in aggregate both domestically and globally, but in less aggregated forms across product types and buyer characteristics will become increasingly important. Fortunately beef demand was rather robust in 2013, in part because of these non-uniform adjustments, and I remain cautiously optimistic that this trend will continue in 2014.
National policy debates within the industry to continue.
- The past year involved continued debates on national issues including animal identification and country of origin labeling. Given the above noted public interest in food production and the diversity of views and situations characterizing operations in the U.S. beef industry related deliberations are bound to continue.
Ongoing prospects of trade deals being passed or adjusted to continue.
- It is well established that U.S. cattle producers operate in an increasingly global marketplace. The ability of the industry to send its products to the highest value market outlets and the comparative interest in countries worldwide to expand or adjust their meat consumption patterns will progressively influence economic prospects for the U.S. industry.