Agricultural News
OSU's Dr. Derrell Peel Says Preconditioning and Risk Management Are Tools to Help You Prosper in 2020
Wed, 15 Jan 2020 06:51:04 CST
As 2020 gets up to speed, Oklahoma State University livestock market economist, Dr. Derrell Peel says beef producers should have at least a measure of optimism. Peel believes the market is looking a little more positive this year, "I think it's I think the overall situation is very supportive. More so, I do expect modestly higher prices, particularly in the second half of 2020, relative to what we went through and 2019. Again I think there's still plenty of potential for volatility but arguably, perhaps a little bit less than what we've been dealing with for many months, over the last year or two."
Peel says another area to be optimistic about going into 2020 is the ability to sell more beef internationally from the U.S. " We've been through an awful lot of turmoil with the trade situation over the last couple of years, and we really began to see that clarify just a little bit at the end of 2019. I wouldn't say we're out of the woods yet, there's a number of things yet to go, but we do look like we're on the verge of removing the uncertainty of the new NAFTA version, USMCA. We have a new agreement bilaterally with Japan, which is going to help us get back to a more competitive position in that market. We think we're on the verge here of signing a partial trade deal with China and begin to sort of unwind some of the things that have been hindering those markets. So for all of those reasons, the overall trade picture for beef and meats, in general, looks pretty positive."
One thing to keep an eye on in 2020 is the impact of African Swine Fever. Peel says this will affect all meat markets, "We literally have lost about 20 to 30% of the hogs on the planet in the last year to this disease. And you know that affects pork markets, first and foremost, but it really affects all protein markets because there's simply less meat on the planet now than there was. And that's going to be supportive of these markets as we go through certainly 2020, and probably sometime beyond that."
Dr. Peel says producers can't do much about the way the markets go up and down, but one thing that they can do here in 2020 is to look at things that they can control, "One of them is at the cow-calf level, by thinking about these value-added kinds of things. Things that I presume, well, I hope most producers are doing, and yet we see lots of evidence that there's still progress to be made in terms of basic production practices. Castrating calves, vaccinating, preconditioning is the package that we put them into. We have lots of data to support the idea that preconditioning does pay the majority of the time, particularly if you work at it a little bit, not only to do those things but also to market for added value. The other part of it is, you know risk management in terms of sort of how and when you price those cattle. You can't change the overall market level, but you can change the timing of when you set your value in the marketplace through contracting perhaps with futures and hedging. Those kind of tools are all worth looking at to see if there are opportunities there that will help you in terms of overall revenue management as well as risk management."
Click on the LISTEN BAR below to hear the complete interview with Derrell Peel as he talks With Ron Hays.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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