Cattle producers can expect profits slightly above break even in 2020, according to the Farm Credit Canada red meat outlook.
Live cattle prices for Alberta of $1.55 a pound are projected for Alberta, an increase of 3.3 per cent.
The Alberta price will be less than the five year average of $1.61 pound. This comes after a year when beef prices showed a 10.8 per cent increase.
FCC estimates Canadian beef production grew 2.8 per cent in 2019 with strong demand from packers.
Packer demand was strong because of five factors:
- Strong processing margins and robust beef demand;
- Closure of beef plants in eastern Canada;
- Idling of a U.S. plant for a few months;
- More imports of live cattle into Canada;
- Higher culling rates in Canadian beef herds caused by poor weather.
Continued high packer volume is expected.
On the input side, feed costs will be slightly lower this year.
Variability in hog prices will continue with forecast prices of $78 per hundred weight for Manitoba hogs, same as last year and $1 below the five year average.
Hog production in the United States, Canada’s largest export market, increased five per cent last year with 4.5 per cent expected this year.
The larger U.S. pork production is offset by demand from China, where African Swine Fever has decimated herds.
The outlook suggests a number of trends need watching this year.
Sales of meat alternatives — tofu, plant-based meat and dairy —grew 25 per cent last year but demand for red meat will be robust.
Beef and pork remain competitive relative to the small meat alternative market.
China usually imports three per cent of pork needs. With swine fever, imports could explode. China consumes 27 per cent of all meat.
The U.S.-China trade deal can affect Canadian exports with large Chinese buying required. Removal of tariffs on live hogs makes them more competitive.
Continued spread of corona virus could weaken demand for meat around the globe.
Ron Walter can be reached at ronjoy@sasktel.net
