Beef Buzz News
Colin Woodall, NCBA, Says Producers Are on The Wrong Side of Market Leverage Right Now
Mon, 03 May 2021 07:59:58 CDT
Cattle producers are caught in a balancing act with the packers, as each side works on leveraging supply and demand, said Colin Woodall, CEO of the National Cattlemen's Beef Association.
Woodall recently talked with Radio Oklahoma Ag Network Farm Director Ron Hays.
It boils down to cattle markets, that's on the minds of everybody, Woodall said.
We continue to see high demand and high cutout values and hear about the packer margins, he said.
On the producer side, we haven't seen a whole lot of appreciation in price, he noted.
The age-old question of how we get more of that dollar in the producers' pockets is top of mind, he said.
The NCBA CEO said they are closely watching the numbers, keeping in mind what cattle producers have said about triggering price transparency thresholds that can swing market leverage to one side or the other.
Leverage is simply supply and demand and if you have the supply and someone wants what you have then you have the leverage, he said.
There are a lot of cattle out there and the packers know that, so they have the leverage, he said.
We're not giving up hope that we can take back that leverage but right now it is firmly in the packer camp, Woodall said.
Part of the problem lie with reduced packer capacity following the 2013-14 drought that reduced cow herds.
Packers made the business decision to shut down plants.
It is clear when you look at the charts and the data that is exactly where that leverage shifted, Woodall said.
We got down to some of the lowest herd numbers in 50 years and there was not the supply to keep the lights on in the plants, Woodall said.
Typically, when a plant goes dark it is rare those light get turned back on and that is what we are seeing now, Woodall said.
Even though the supply is back up those plants have not returned and that is why the packers have leverage, he added.
Click on the LISTEN BAR below to hear the complete interview with Colin Woodall 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.
Ron Hays Beef Buzzes With Colin Woodall
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