Beef Buzz News
Cattle Herds Are Shrinking And Intensifying Focus On Packer Capacity, Says Randy Blach With CattleFax
Fri, 18 Sep 2020 08:07:38 CDT
The nation's cattle herds are shrinking and that will intensify the focus on beef packers to increase harvest capacity, says Randy Blach, CEO of CattleFax, a global leader in beef industry research, analysis and information.
Ron Hays Beef Buzzes With Randy Blach
Blach was a featured speaker for the 2020 Virtual Cattle Raisers Convention online this week. The virtual conference replaced the Texas Southwestern Cattle Raisers Convention cancelled in March.
During his presentation on the market outlook for beef cows, Blach analyzed some of the numbers from the past few years.
The January 2014 cattle inventory report showed we had 29 million head of beef cows. By July 2018 the herd expanded to 32.5 million head.
Since that time the numbers have decreased significantly.
The cow herd right now is shrinking, Blach said.
Last year we were down 350,00 head and probably 300-350,000 head again this year, he said, based on the dryness we're seeing in the west and low profitability for cow/calf producers.
Blach said we need to anticipate at least one more year of downsizing.
It's possible we will see a million fewer beef cows by January 2021 or Jan. 2022 than what we had two years ago, Blach said.
When we hit the low mark of 29 million head in 2014 Blach said the industry could have supported more cattle but the natural resources would not align with the needs.
Mother Nature wouldn't allow that to happen with no feed and water in the central and southern Plains, Blach said.
Now add COVID-19 and we have another limiting factor.
Additional harvest capacity is needed, Blach said and the last 12 months has shown the industry is vulnerable in that area.
When we are able to add capacity that will allow us to see a little more profitability flow back through the industry, he said.
Smaller cow herds will mean fewer calves and more competition among the feedlots and packers chasing after the lower numbers.
The smaller herds meant we lost about 100,000 head of weekly capacity between 2005 to 2016 because of the drought and low profitability.
In 2005 we had the capacity to harvest 568,000 head of cattle on a 40-hour work week, Blach said.
By 2016 it was more like 465,000 head.
The fire at the Kansas plant and COVID-19 further reduced harvest capacity, leading to the current situation where packers have the extra leverage because they don't have the capacity.
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