Schultz: Trade vital to animal ag’s future
Positive on pork but concerned by beef supplies sums up Iowa State University Livestock Economist Dr. Lee Schultz’ presentation to the Iowa Farm Bureau Economic Summit, held June 28 in Des Moines.
“We’re still bullish on pork prices,” Schultz said, presenting his expectations for red meat markets in 2019 and 2020.
He noted he expects to see pork prices about $6 higher in 2019 compared to 2018, and as much as $8 higher in 2020. “Profitability looks to be great in 2019 — about $15-$20-per-head profit; it could be even better in 2020.”
On the other side of the equation regarding beef, Schultz said, “right now I’m predicting about a $60-per-head loss in 2019 and about $50-per-head loss for most of 2020.”
Schultz sees the possibility of better break evens for beef next year through reductions in farmland rent prices and possible reduction of feeder cattle numbers. A big unknown for this year is the availability and cost of hay and related feedstock going into fall and winter.
“This year we experienced the second lowest May 1 hay stock we’ve seen,” he said. “The lowest was 2013, post-drought.”
Exports are critical
Going forward, he believes U.S. producers will become even more dependent on international trade to turn a profit.
Schultz said the U.S. Department of Agriculture projected over the next five years 4% growth in U.S. meat production, and as much as 10% growth in the next 10 years.
“So far, we’ve consumed a lot of this additional production here in the United States…, but expectations are that we’re going to start to see limited per capita consumption growth going forward.”
One reason Schultz is positive on potential trade growth is the broader range of countries now buying from the United States.
“This gives us the ability to withstand issues that arise in a specific country,” he said.
South Korea in 2018 was an example of this, Schultz said. Exports dropped due to the trade dispute with China and the U.S.’s abandonment of the Trans-Pacific Partnership.
At the same time, South Korea began buying substantially more U.S. pork, helping to soften losses from other markets.
“In pork production, no one beats us on price, so we should be able to get into any market we want,” he said.
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