CattleFax Industry Outlook

cattlefax“It has to rain and we have to have a corn crop,” Randy Block, CattleFax CEO, said at the Cattle Industry Convention in Tampa.

All of the projections made by the CattleFax analysts depend right now on how much moisture producers get on their farms and ranches. Drought damaged pastures and high corn prices have delayed herd expansion and created problems throughout the cattle industry.

In his summary Bloch said margins for the feedlot sectors will be negative, the margins in the stocker sector will be narrow but positive, and calf  prices will reached record highs. Kevin Good said feeder cattle could average $126 for the year, 750 pounds steers could average around $155, and the average price for calf could near $175.

There is still an over capacity in the feeding and packing sector, Bloch said. We will see more packing plants close in 2013. The 2013 beef cowherd reached a near-term low of 29.3 million cows, although herd liquidation did slow down in 2012. In the feeding sector there is 25 to 30 percent excess capacity. There is excess capacity chasing a declining supply of feeder cattle.

“In 2012 cattle feeders did not make money, packers did not make money, and retailers did not make money,” Bloch. “Does that tell you that this market has been running into a ceiling that we have not been able to push through.”

That ceiling relates to the number of people who are still unemployed and the economy in general.

“The people downstream from your product must make money or eventually they are going to Uncle,” Bloch said.

Block said drought recovery is the best remedy to the current situation in the beef industry. Herd liquidation and high inputs prices will continue until precipitation returns to large portions of the U.S. More drought conditions in 2013 will likely lead to more herd contraction and high prices for inputs.

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Categories: Convention News, Uncategorized

Author:dougnrich

Senior Field Editor, High Plains/Midwest Ag Journal.

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