TCFA Concern Over Drought, Lack of Cash Cattle TradeWed, 05 Nov 2014 15:25:00 CST
Fifty years ago a lot of the cattle in the US were being fed corn and finished out in the midwest. With heavier annual precipitation farmer-feeders battled muddy pens, which made it hard on cattle. With drier conditions in the High Plains that led to the development of the feedlot industry. Feedlots sprang up as a result and packing plants followed the cattle. This created a dominant industry across southwest Kansas, Oklahoma panhandle, Texas panhandle, portions of New Mexico and south eastern Colorado. The Texas Cattle Feeders Association represents three of those states with membership in Texas, Oklahoma and New Mexico. TCFA Chief Executive Officer and President Ross Wilson believes there won't be switch back to the midwest anytime soon.
"I can't imagine the industry infrastructure that we have in place in the southern Great Plains in the Texas and Oklahoma panhandle, southwestern Kansas, southeastern Colorado is going anywhere," Wilson said.
Radio Oklahoma Network Farm Director Ron Hays interviewed Wilson at the recent TCFA Annual Convention held last week in Oklahoma City. Click on the LISTEN BAR below to listen to today's Beef Buzz feature.
The midwest has not seen the deep impact from the drought like the southern plains, but there have been other challenges. Wilson said with the grain basis situation and the limited availability of railroad cars due to competition from oil, coal and containers there has been some shift of cattle numbers north.
"So far this year Nebraska has had more cattle on feed than Texas for the first time ever for three of the current ten months," Wilson said. "I don't think that's on an annual basis for 2014 as we look back on 2014. I don't think the midwest will market more cattle then we do in the southwest."
Recently the cash market set a new record when the market traded at $1.70 a pound or $170 a hundred weight. At the same time the cash market looks to be getting thinner in terms of reported sales. In comparison to a year ago the cash market has become thinner. Wilson said that is a concern to a number of people there have been weeks when no cash cattle traded was reported.
"While there were tens of thousands of head that traded on grids, formulas, and other price discovery mechanisms, but we didn't have that traditional fundamental cash price - cash trade setting the floor for those other markets," Wilson said. "So we used other price discovery tools."
While there is more cash trade in the midwest than the southern plains, both regions share some of the same concerns and this is spurring a lot of discussion in the industry. Wilson said they working with a multi-regional working group through the National Cattlemen's Beef Association to address that issue. He said they are exploring the possibility of identifying a better price discovery or value discovery mechanism than the older styled more traditional live cattle - cash trade.
One piece of the puzzle will be the re-authorization of mandatory price reporting requirements with the US Department of Agriculture. The concept was developed to ensure producers are getting as much price reporting information or data as possible. Wilson said there are a number of people who believe there needs to be more transparency in mandatory price reporting and maybe more needs to be done in how the industry reports the different kind of trades and kinds of cattle so producers and feeders who are selling those cattle get the best information possible.
Wilson said this will be high priority for the Texas Cattle Feeders Association, Oklahoma Cattlemen's Association and the National Cattlemen's Beef Association in 2015.
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