A mid-year update on the outlook for red meat producers came in less than optimistic.
The update notes a good start for beef producers in the first half “will likely be negated in the second half of 2019, leading to a year of challenged profitability for both cow-calf operators and feedlots.”
On the heels of strong first quarter livestock cash receipts – a four per cent increase for cattle – the report for Farm Credit Canada predicts declining meat exports, higher feed costs and seasonal price dips.
A stable Canadian beef cow herd and increased marketing weights helped grow Canadian beef production in the first half of 2019.
“This larger beef supply was met by strong domestic and global demand, including Japan where Canadian export sales doubled between January and June. Price swings have since reversed the cattle sector’s early upward trend.
“The United States Department of Agriculture forecasts the 2019 third quarter fed steer price at US$1.10 a pound., the fourth-quarter at US$1.14 a pound and the 2019 annual price at US$1.17 a pound.”
Feed cost increases may not be as bad as previously thought.
Positive margins are expected for the Canadian hog sector which has seen price declines of nearly 18 per cent during the last year.
Increased hog production in the United States has kept hog prices from their potential levels even with the African Swine Fever (ASF) epidemic in China.
China has imported 41 per cent more pork this year and accounts for 27 per cent of global meat consumption.
Conservative estimates place swine fever losses at 10 per cent of China’s 600 million hog population.
Report author Martha Roberts points to issues on the radar that include Chinese-American trade talks and their meat implications, possible South American record crops that could dampen feed prices, swine fever spreading, and China’s suspension of beef and pork exports.
Ron Walter can be reached at [email protected]
