Beef Buzz News
Cattlefax's Randy Blach Says Trends Favoring Cattle Industry Now Coming Into Play
Wed, 06 Nov 2013 10:58:54 CST
The trend is your friend. So say commodity traders and, now, so does Randy Blach of Cattlefax. He spoke at the Texas Cattle Feeders Association convention in Forth Worth and said that trends currently in place are becoming more favorable to the cattle business. He spoke with Radio Oklahoma Network's Ron Hays about declining input costs, beef cow herd rebuilding and risk management. Topping the list? Falling corn prices.
"It's a big deal. We've obviously been short on corn over the last couple of years--over the last several years as we've had all the demand come in for ethanol. And then we had the drought on top of that. So, it's been impossible for the livestock industry to really catch a big enough corn crop in here to where we had production costs at levels where we could really make a living."
Blach said he believes the price of corn and other grains will remain relatively low for the near future and that will be good news to producers.
"I think that will be the case for all these grain markets. All these markets cycle and they'll cycle back down to where prices in our grain structure will be back, basically, at the cost of production for the next several years. As we go through that transition we should be able to generate some more positive operating margins for the next several years as a result of that."
Input price trends favorable to beef producers are not only to be found in the feed grains, Blach said, but also for hay and energy costs as well.
Another trend that Blach spoke about was the size of the nation's cow herd. He says numbers haven't turned the corner just yet, but they are very close.
"We'll see a smaller herd yet on January 1 of '14, but we do like what we see happening. The number of beef cows being harvested has slowed significantly. We're going to keep a few more heifers and not put them in the feedlot stream. So, if we keep our fingers crossed that we'll continue to get some good moisture, by January 1 of 2015 we should see an uptick in the beef cow herd."
High heifer prices are a concern as producers seek to augment their herds, but Blach said everything needs to be kept in proper perspective. He said that the cost of replacement bred heifers is still about equal to the price of two calves. That is roughly the same ratio producers have dealt with for the last 40 years. At that ratio, he said, cash flow will be sufficient to grow the cow herd over time.
Blach said that as the beef industry has continued to evolve, one of the factors that has to be faced and understood is risk.
"The change in the cattle market from highs to lows on an annual basis if we go back ten years ago, that range was $150 a head. Now it's $350 a head. And we're doing this while trying to make the same amount of money. So, it is an incredibly risky business that we are in and we've got to manage risk as a result of that."
Click on the LISTEN BAR below to hear more from Randy Blach and Ron Hays.
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.
Randy Blach talks about positive trends at the Texas Cattle Feeders Association convention.
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