Agricultural News
Challenging Times Still Ahead for Preserving, Rebuilding U.S. Cattle Industry
Tue, 18 Jun 2013 16:34:54 CDT
There are plenty of challenges facing the cattle industry today says Troy Applehans of Cattlefax. He spoke with Radio Oklahoma Network's Ron Hays after the recent "Managing for Profit" seminar conducted at the Beef Improvement Federation's annual meeting in Oklahoma City.
Applehans is a market analyst responsible for feeder cattle and cow/calf regions of the Southern Plains as well as the Southeastern states of the U.S. He also covers feedyards in the Midwest region. Troy is a graduate of Oklahoma State University with a degree in Animal Science and a strong cow/calf and seedstock cattle background.
Applehans says the cattle industry-across all its various operations and segments-is currently undergoing some massive changes and will continue to do so in the foreseeable future.
"The industry, in terms of the different segments of the industry, if you them into the packing, feeding, stocker, cow-calf operations, they need some realignment due to the available supply due to numbers being down as far as they are. Obviously the packing segment has responded to an overcapacity situation by the closure of some plants over the past several years--most recently the Plainview, Texas, plant that Cargill had.
"And they've responded much more quickly, however, than the feeding sector where we remain at that 25 to 30 percent over capacity situation there which makes the margins extremely difficult for them. But at the same time they've found ways to differentiate themselves in terms of what they feed. Sometimes some of them have gone to Holsteins, developing heifers, lighter weight cattle in order to keep occupancy rates up for longer periods of time.
"And those are the kinds of things we need to see, but I fear we still will see a lot of the feedyard business in and of itself go out of business. The inherent value to the feeding industry is not very good right now."
Taking it back to the ranch level, Applehans says cow-calf producers can be profitable with diligence and proper management. He says ranchers with genetics that perform well have the greatest opportunity for continued profitability. Solid genetics add value all along the chain.
He said certain sectors of the market are emerging from the doldrums and expanding the country's beef cow herd will take time and needs to be approached with caution.
"The thing that we have to take into account is that expansion is oftentimes a double-edged sword. If you expand too fast, prices go down. If you don't expand yet you have customers for your product that you can't fulfill your orders, they go elsewhere for the product.
"As we go forward I think we'll have the opportunity for expansion. I think we'll have the economic incentive for it. I think the increase in exports that we've seen will allow us to do that to where we won't hurt prices as badly as we may have in other time periods that we have expanded."
He said he believes the number of cows is stabilizing and increases will begin when Mother Nature allows it. He said the proportion of heifers to steers being slaughtered is moving in a positive direction and producers are starting to keep back replacement heifers where feed is available.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also 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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