CattleFax's Randy Blach Sees Industry Making "Massive Change" in How It Handles Risk ManagementThu, 01 Aug 2019 11:06:57 CDT
Randy Blach is chief executive officer of the beef industry analytics firm, CattleFax. During the 2019 Summer Business Meeting of the National Cattlemen’s Beef Association in Denver this week, he offered a mid-year summary of the cattle business. In an interview with Radio Oklahoma Ag Network Farm Director Ron Hays, he remarked that bottom line, the industry has done well so far this year.
“We’re getting along pretty good. We’re not making a lot of money on cattle that are coming out of the feedyards but when you look at what we’ve accomplished year to date - the industry has done a good job at risk management,” Blach said, noting that hedging was at its highest level in ten years. “So, producers took some of those profit opportunities and I think cash to cash losses are probably a little bit overstated when you take into account the risk management.”
According to Blach, this heightened awareness and obvious engagement in risk management is a sign of a major shift in the minds of producers that has steadily formed over several years since markets became increasingly volatile. The whole process, he believes, has taken nearly 20 years for producers to wrap their arms around the concept of hedging, but says the actual catalyst that pushed them from theory to practice began in 2008 when markets became extremely unpredictable. Blach says this forced producers to realize the changes that had to be made in order to keep their businesses going. More than ever, he says producers are being smarter in terms of risk assessment in their marketing decisions and complacent with “singles and doubles rather than swinging for the fences.” Despite the complexity of the market though, beef demand has remained strong and generally supportive. Blach says the evidence of demand is in producers’ bottom lines. He adds that demand remains strong in the face of growing production and total supplies of beef in the marketplace.
“I think the message is loud and clear,” Blach said. “The industry started to really focus on quality. We moved the quality needle like nobody expected… and consumers are willing to pay for it.”
Listen to Hays’ full conversation with Blach for more of his insights on the cattle business on today’s Beef Buzz, or click here to listen to his complete presentation delivered at this year’s meeting.
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.
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