Agricultural Economics Department


Date of this Version


Document Type

News Article


Farm and Ranch Management News, August 31, 2020

Also available at

DOI: 10.13.14/frm00021.


Copyright 2020, the author. Used by permission.


Overarching Market Conditions

The recent cattle on feed report suggests that cattle feedlots are coming closer to sorting through much of the backlog associated with plant closures and shutdowns as a result of plant workers testing positive for COVID-19 and plants implementing CDC and OSHA worker health recommendations. For example, the number of cattle on feed over 90 days has dipped below 2019 levels for the first time since April. However, cattle on feed over 120 days is still about 10% higher than 2019. The result of cattle being on feed longer is sustained record level dressed weights for both steers and heifers. Heavier carcasses has led to higher beef production in recent months relative to 2019 putting downward pressure on cattle prices. With net feedlot placements (i.e. "feedlot placements - feedlot marketings)" higher than 2019 and the five year average, cattle feedlots look like they are once again reloading with cattle less than 700 lbs. potentially sustaining record beef production in the long term that will need to be consumed. With lower, but growing, domestic demand and concerns about what a second government shutdown might due to domestic demand, beef export demand is likely to play a larger and more prominent role in sustaining domestic cattle prices.

FAPRI Forecasts

So how well are economic forecasts incorporating these export and domestic demand conditions? This past week, the Food and Agricultural Policy Research Institute (FAPRI) at the University of Missouri updated their five-year baseline forecast for beef. Their estimates (see Supporting Table 1 below) continue to support the idea the US cattle cycle has peaked and will continue to contract over the next five years. Despite declining beef cows, total beef production is forecasted to be relatively stable at 27 billion pounds per year. Stable production given declining count number can be attributed to heavier carcasses and more efficient feeding systems. Net exports (beef exports – beef imports) is expected to widen from +140 in 2021 to +245 in 2025 largely due to ASF and increasing global competiveness of US beef. Smaller cow numbers will reduce the size of future calf crops reducing the number of feeder and fed cattle marketed and ultimately boxes of beef available to be sold. Combined, this has the effect of raising prices along the supply chain. Planning prices in 2021 were estimated as follows: boxed beef @ $221 per cwt., 5-area steers @ $113 per cwt., and OK City feeder steers @ $151 per cwt.