CattleFax's Duane Lenz Kicks Off OCA Convention with Some Challenging, Yet Favorable ForecastsFri, 20 Jul 2018 17:29:26 CDT
The 66th Annual Oklahoma Cattlemen’s Association commenced Friday morning with its opening general session featuring keynote speaker, Duane Lenz, general manager of the leading industry analytics firm, CattleFax, who offered a comprehensive overview of the beef industry including a future outlook. After his presentation, Lenz spoke with Radio Oklahoma Ag Network Associate Farm Director Carson Horn about some of the highlights of his talk with producers. Listen to their complete conversation by clicking or tapping the LISTEN BAR below at the bottom of the page.
“It’s been a pretty good time for the cattle industry,” Lenz began, in review of the current market situation. “Feedyards are starting to lose a little bit of money but stocker operations have been profitable and cow/calf folks have done really well this year - prices hung in there better than we though. So, overall it’s been a good year for the industry.”
Anticipating more cattle on feed than the year before, Lenz says producers will be faced with the results of herd expansion that has been ongoing for the past two to three years. In order to absorb the larger supplies expected just over the horizon, Lenz insists the industry will have to continue to aggressively move more cattle year-over-year. He says this will be challenging as the recent loss of some packers has caused some concern in the industry, begging the question of how we will be able to process everything as supplies relentlessly increase. But, Lenz is confident it can be done.
“We think we can, but summer is going to be our biggest problem and we’re going to have to keep labor going,” he said, adding that the slow moderation of growing carcass weights has eased some of that pressure. “I think folks in feedyards haven’t been that optimistic about prices moving forward. But, until the last couple weeks we’ve been profitable. So, let’s sell these cattle while we can, no reason to hold cattle... just bet on the market. When you do that it keeps your weights down and it lowers your expected beef production.”
That point has become particularly important this year as expectations are such that 2018 will hit at least in the top three record high years for total beef production.
“If we don’t set the record this year, we will next,” Lenz said confidently. “There’s going to be a lot of beef out there. We can handle it, but the question will be the price… and of course, we’re going to need to continue to have help from export markets.”
Luckily, therein lies the good news for producers as worldwide demand for US beef has been remarkably resilient this year and Lenz believes it will continue as long as the economy remains strong to support current price levels. However, the matter becomes more complex when you consider the bigger picture which brings into focus increasing competition from other major proteins like pork and poultry. To ensure its place on top while staying ahead of the curve - Lenz insists the industry will have to be innovative, work with new products and market aggressively to consumers in order to stir the demand that will keep meat moving. If done right, Lenz says the beef industry should be able to coast through the next few years comfortably as the herd expansion levels out.
“There’s probably going to be a little more price pressure with bigger numbers,” he concluded. “But, we think good producers who do things right will continue to be profitable.”
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