AgResource President Dan Basse Talks the Financial Factors in the Ag MarketsTue, 17 Sep 2019 17:02:41 CDT
Positive future from demand for beef quality
A veteran global market analyst kicked off presentations at this year's Feeding Quality Forum in Amarillo with an overview of financial factors in the ag markets.
Tariffs and trade wars from here to China can disrupt commodity markets, but they can't keep a lid on bullish fundamentals in cattle and hog markets for long, says analyst Dan Basse (BAH seh).
"The cattle industry is in a good spot to really help itself with numbers," Basse said. "Domestic demand will be record strong this year and for many years going forward. I see export demand is picking up even though we have this trade blockage with USMCA and even with our friends in China, we're still getting record amounts of beef out the door."
Watch a short video-clip featuring Dan Basse, AgResource Company president, shares his thoughts on the financial factors in the ag markets, by clicking or tapping the PLAYBOX in the window below.
That's bullish for prices, but there's more good news for cattlemen on the cost side.
"We're really not worried too much about the supply of grain and feed and forage going forward," he said. "The Plains looks like it has its abundance of moisture, hay supplies are adequate, forage heading into the winter will be good."
"We think corn prices drop to the $3 level by next summer and so there's going to be this cheap feed that's available to cattlemen."
Cattle futures on the Chicago Mercantile Exchange are looking for bottom, Basse says.
"So we see the Chicago market as very close to a seasonal low in the next two to three weeks," he said. "We think the cash market bottoms between $100 to $102."
"Looking at feeder cattle prices, because of falling feed grain prices, low interest rates, we think feeder cattle prices at this $135, $140 level catches the market, will start to move higher," Basse said. "but we really think producers should be looking at the feeder cattle market because of the opportunity heading into the first quarter on breaks. There's some margin to be made."
With the bullish market taking shape, cattlemen may wonder if they still need to invest in genetics and management to produce premium quality grades.
"Well, the U.S. consumer demands a higher quality beef today," he said. "My response oftentimes is that I think we always need to shoot for that higher grade, but I see opportunities in both export and the consumer because of the quality of U.S. beef is so high and the tastefulness and everything else is there to keep it all going. So my advice to the cattleman is always look for grade. I think it's a good investment going forward and that consumers will reward you with bigger demand going down the road."
Source: Certified Angus Beef
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