After a tough couple of years in the livestock industry, Scott Brown, an ag economics professor at the University of Missouri, says there may be a light at the end of the tunnel. He recently joined the Top Producer podcast to share what he believes is on the horizon for beef, dairy and pork producers.
Rebuilding in Beef
Brown shares the current state of the beef industry began forming in 2020. And after three years of drought in cattle country, as well as significant liquidation, there's a supply shortage.
"I think it's taken us longer than maybe we typically would have thought to get some rebuilding to happen," Brown says. "You add on top of that costs have just continued to go higher, so the prices we need for cattle to generate the interest to grow herds are very different today than just a few years ago. A lot of that's at play."
He expects to hit 2026 before there is significant growth in the country's beef cattle herd.
"At some point, there will be enough profitability to get more beef cows back in the herd," Brown says. "I think the operations will also continue to get bigger on the cow/calf side."
Improvement in Pork
Coming off a year Brown likens to 1998 for pork producers, he says the financial side is showing signs of improvement.
"By April, we were starting to see hogs that might have been in the black again for the first time in several months," Brown says. "There are still a lot of them that have probably a reasonable financial hole to climb back out of given how tough 2023 was, but it's good to see some positive news on the pork side."
He adds productivity has been phenomenal and anticipates international demand to play a large role in the future.
"Even though we've been losing sow inventories in the country, productivity has more than offset some of that and suppliers continue to run fairly high," Brown says. "The pork industry generally has been really good about getting international demand to grow in some new places. Central America, Mexico, and now some smaller Central American countries, are now taking some pork from us. That's a great longer term move for the pork industry."
Expanding Demand in Dairy
Like the pork industry, Brown says dairy experienced a tough 2023 due to low prices.
"Dairy markets are the most demand inelastic markets we have in agriculture. But when supplies out strip that demand just a little bit, we can get some fairly low prices. I think that happened in 2023," he says. "Cheese has been one of the most important demand-side factors. How do we continue to expand that side?"
Looking ahead, Brown says prices have improved in dairy and, at the same time, lower prices for corn and soybeans are helping producers as well.
EDITOR’S TAKE:
It sounds like things are improving again in the livestock sector. According to Brown, supplies have been tight, but should be expanding. The expansion will be driven by increased prices at the grower level and stronger margins as well. All this is welcome news, especially for pork and dairy producers, who have been underperforming for the last year or so. It appears that all segments of the livestock industry should have a much better 2024 and into 2025. Be sure you continue to put your inventory on AgTruckTrader.com®. Also, be sure to mention CADFI, our financing solution that matches payments to the farmer/rancher cash flow.
