CALF_News_April_May_2020

24 CALF News • April | May 2020 • www.calfnews.net Profitability, Global Markets Highlighted at CattleFax Outlook Seminar By Patti Wilson Contributing Editor THE ANNUAL CATTLEFAX OUTLOOK SEMINAR was held Feb. 6, 2020, as part of the Cattle Industry Convention in San Antonio. There was plenty for CattleFax Chief Executive Officer Randy Blach to reflect upon in 2019. He led off the two-hour session by reminding us that volatility is still a threat, although we are experiencing a more positive environment than 2019 provided. A critical time for the cattle industry surrounded the Holcomb fire less than a year ago, and subsequently, we are reminded that markets work, given time. It is a basic fact of economics. Weather Creighton University Professor Emeritus Art Douglas, Ph.D., gave his temperature and precipitation outlook. It points to the development of a strong La Niña by summer. For the Plains states, that means warmer and drier summer weather. Thank- fully, Douglas maintains that there will not be a repeat of the 2019 flooding across the Corn Belt this year. Conversely, there may be pockets of summer dryness across the Midwest. Risk management Mike Murphy presented his analysis of the unfolding trade situation in China. Paramount to U.S. beef price improvement is the Chinese export market. An important aspect on the part of the Chinese is their agreement to allow beef that has been treated with hormones at internationally recognized maximum residue levels. The loosening of various restrictions like this will help enable China to overcome the loss of 50 percent of their pork production due to African swine fever. This is a critical junc- ture for the world’s most populous country; more reductions in Chinese pork production are expected in 2020. Already, Chinese imports of beef, pork and poultry have increased 42 percent in 2019. Additional increases are expected this year. A wildcard and significant risk will unfold as the world grapples with the human coronavirus unleased in China in January. Cattle production segment Kevin Good provided analysis of U.S. cattle production. In a nutshell, 2020 is looking at being a better year. U.S. cattle- men are producing more beef with fewer cattle. Technological, genetic and nutritional advancements have pushed efficiency and sustainability to new highs. Cold carcass weights in 2020 are expected to reach 819 pounds, the third highest ever recorded. The cattle cycle is officially over, as the beef cow inventory is flat. What happened after the Holcomb fire? The scare that sent the U.S. cattle industry reeling was the possibility of running critically short of slots at our nation’s packing plants. Saturday kills were initiated at many other U.S. packing plants, which literally saved the market. These kills are being phased out as Holcomb reopens, but what was considered a panic turned into a managed situation. LEFT: Weather wizard Art Douglas, Ph.D., said a La Niña is returning, which means drier weather in the Southwest. RIGHT: CattleFax analyst Mike Murphy notes that with the new China trade deal, “We will be in position to sell grain-fed beef to China.” CattleFax CEO Randy Blach highlights the need for continued risk management due to high market volatility that included several trading days that spanned up to $16 per hundredweight. • 2 0 2 0 C A T T L E I N D U S T R Y C O N V E N T I O N A N D T R A D E S H O W