Date of this Version
Farm and Ranch Management, September 14, 2020.
A shorter version of this article was first published in Nebraska Cattleman magazine.
About one of the only things certain about forecasts this year has been the great deal of uncertainty. Numerous “novel” situations have confronted the industry making it difficult to estimate price magnitudes rather than just price direction. Clustered plant closures, government quarantine restrictions, and increasing at home phone consumption are just a few of the major issues the beef industry has had to tackle in the last six to eight months. Some things have returned to “normal” such as packing plant capacity and food service demand. Others are still in ongoing recovery.
Who knows what “normal” or “standard operating procedure” will look like in the future! Most of the modifications occurring involve trying to meet changing consumer demand and meat processing/packaging. While this does not directly impact the ability of an operation to raise a steer, it indirectly impacts each operation through changes in price premiums passed from the supply chain. These modifications have impacted the “normal” or predictable price/basis seasonality patterns this year.
Seasonal patterns allow producers to make informed production and risk management decisions. These historical patterns combined with current market information and operational cost of gain (COG) and breakeven prices allow evaluation of cash forward offerings. Deviations from the seasonal patterns largely occurs due to overlaying trends, industry cycles, and unique supply and demand factors. In this article I review what are some of the price/basis forecasts for three beef market segments: 1) beef wholesale, 2) live cattle, and 3) feeder cattle. In addition, I focus how production in the other protein sectors (i.e. pork and chicken) could potentially impact these price projections. I provide these price/basis projections with projections from the Livestock Marketing Information Center (LMIC).