HOUSTON – CattleFax officials recently discussed expectations for the beef sector in 2022 during the Cattle Industry Convention and National Cattlemen’s Beef Association (NCBA) trade show.
Experts gave market and weather analysis at the firm who forecasted cattle price and profitability trends are pointing in the right direction despite the continued COVD-19 pandemic challenges.
Kevin Good, vice president of industry relations and analysis at CattleFax reviewed how labor issues and packaging challenges continue to linger in the industry, but both are expected to improve during 2022. He noted that and strong global and domestic consumer beef demand would increase profitability across segments.
“Drought, market volatility and processing capacity challenges affected 30% to 40% of the cowherd over the last year,” he said. “Without an improvement in weather and profitability, at least 250,000 more head will be liquidated in 2022.”
Good also said US beef cow inventories fell more than 700,000 head from last year and are off nearly 1.6 million from cycle highs. For 2022, the beef cowherd is projected to reach about 30.1 million head.
CattleFax data indicated that the feeder cattle and calf supply will be 675,000 head smaller than 2021, totaling 25.5 million head. Fed cattle slaughter will decline 400,000 head lower compared to last year, at 25.7 million head. The group also projected that commercial beef production will contract over the next several years starting with a 2% decline in 2022.
US beef exports are expected to grow by 5% (3.7 billion lbs) in 2022 according to CattleFax. The increases will be led by year-over-year gains in China, Japan, and South Korea, which are American partners for the global protein trade.
“The tightening of global protein supplies will support stronger US red meat exports in 2022,” Good added.
Another focal point for the beef industry this year will be the expected normal spring and summer weather patterns and its effect on the corn and soybean yields.
With that information, CattleFax forecasted planted corn acres at 91.8 million and soybean acres are expected to remain near 87.2 million acres.
“Exceptional demand from China is leading US corn exports to new records and expanded interest could easily push exports higher in 2022,” said Mike Murphy, CattleFax vice president of research and risk management services.
He also noted that the weather would influence hay prices, with much of the Central Plains and the West battling some level of dryness or drought.
Matt Makens, the meteorologist for CattleFax, stated that La Niña remains firmly in control of the ocean-atmosphere system, and that is unlikely to change this spring. However, it remains possible that there will be some changes throughout summer.
“For the US, barring any change to the La Niña outlook or sudden warming in the Gulf of Alaska, dryness continues across the Southwest and South with warms temperatures, too,” according to CattleFax officials. “The Northern Plains and Corn Belt are expected to have wetness farther east this spring and drier conditions for this summer, with temperatures closer to normal versus 2021.”
At the end of the session Randy Blach, chief executive officer for CattleFax, expressed a positive outlook with the expectations for margins to improve as cattle supply tightens and producers gain leverage back from packers and retailers.
He also expects beef demand to remain solid with expected export growth, and utilization and packing capacity to improve over the next few years.