Cattle Markets May Be in for An Upswing Predicts Ag Economist
By Lura Roti for South Dakota Farmers Union
You know current agriculture markets are unique when a seasoned agriculture economist refers to them as “fluid and strange.” That’s exactly how Mike Pearson, anchor of This Week in Agribusiness described current markets when he addressed South Dakota producers during a February 9 webinar hosted by South Dakota Farmers Union (SDFU).
“It’s a strange and fluid situation we are in, and many are wondering how best to make decisions to move forward,” Pearson said.
Wayne Soren would count himself among the many farmers trying to navigate the unique situation. “Before we started harvest last fall, we were told there was 3 billion bushels of corn on hand. Right now, there’s only 1.5. So, things turned around really fast,” explained the Lake Preston crop and cattle producer.
Like many producers, Soren was encouraged by 2020 markets. “We sat here for three or four years with below production prices, and finally we were able to sell at a profit.”
Like most farmers, Soren knows his farm expenses well. So, when he saw the opportunity to market his grain at a profit, he sold most of it. And then the markets continued to increase. “What we were told was going to be a huge supply of corn and soybeans, all the sudden turned into, whoops we don’t have enough soybeans to get through harvest.”
Unexpected export demand from China surprised the market, Pearson explained. And until Brazilian grain crop is harvested, U.S. corn and soybean markets are expected to remain strong. “Supplies can change quickly, we have Brazilian crop that will be coming out shortly,” Pearson said. “Upsets can happen.”
“My big take away from this webinar is, things have improved a lot, but you need to keep looking at all the different fundamentals when making marketing decisions,” said Soren, who also serves as Vice President of SDFU, the state’s largest agriculture organization.
Making sure he has plenty of information is among the reasons Soren makes time for educational seminars throughout the winter months. “Going to school is a never-ending process. You need to make the time to listen to people who can help you in your job. And my job is agriculture.”
Providing educational opportunities to members and their families is part of the mission of SDFU.
“Education is right there in our symbol,” Soren explained. “Right alongside legislation and cooperatives.”
With this focus in mind, each year the organization invests in youth camps and producer education. Due to the pandemic, this year, SDFU leadership saw an informational webinar series as a safe and effective way to provide information to producers.
Pearson’s presentation is one of four webinars the organization is offering to producers at no cost this winter.
“It’s a good way to participate during a pandemic,” said Kurt Bindenagel, a Frankfort crop and cattle farmer. “Webinars are a good way to keep informed and learn about topics without having to be in person.”
Of the topics and information covered by Pearson, one fact in particular stood out to Bindenagel. “When he shared that in 2018, Americans spent more on food purchased in restaurants than in grocery stores. I never would have guessed that,” Bindenagel said.
Due to the pandemic this trend came to a screeching halt, Pearson explained. However, once consumers feel safe, he expects the trend to pick back up and this could have positive implications for cattle producers.
“Live cattle market, it is the market I am most bullish on through today and summer,” Pearson said (no pun intended.) “If people can go back out to restaurants, we will see incredible demand for beef.”
This information also stood out to Hank Wonnenberg, a Dallas cattle producer and banker. “There’s a pretty good chance there may be a run on the cattle market once the pandemic ends. As a cattle producer, I may not be able to take advantage because it just depends on when my calves are ready to sell. But, if the markets help one segment of the beef industry, it will benefit other areas as well.”
Like Bindenagel, Wonnenberg has tuned in to each of the SDFU Producer Hour webinars. “Mike Pearson has such an interesting perspective on how current events could impact markets going forward. These are good things to keep in mind,” Wonnenberg said.
If you were unable to tune in to the webinar with Mike Pearson, visit www.SDFU.org to view this and other webinars from the series at no cost. Webinars can be found in the Media Library link under the News & Events tab.