Beef Buzz News
Analyst Randy Blach Says Margins a Little Tight This Year, But Cow/Calf Sector Remains Profitable
Tue, 02 Apr 2019 12:48:20 CDT
From 1980 to 1988, beef demand was cut in half. Since that time, it has slowly come back up ever so gradually. Randy Blach, CEO of the cattle industry analytics firm CattleFax, says that improvement since 1988 has been critical to the success of beef producers and helped to bring the industry where it is today.
Listen to Blach's full summary of the cow/calf segment's current level of operational success, below.
"I can't even imagine what our industry would look like had we not taken the bull by the horns so to speak and making this shift. We would have an industry that would be miniscule had that not happened," he remarked. "Every industry has timelines and benchmarks along the way and thankfully our industry has been able to get focused get behind this quality revolution that we've seen and we're getting paid dividends for it."
According to Blach, the difference is plainly seen in just the sheer quality of the cattle herd that exists today, genetically speaking. In just the last decade, Blach says the genetic quality of cattle has been enhanced dramatically. That rapid development, Blach attributes to necessity after the industry faced considerable adversity during prolonged periods of drought and a significant liquidation of the herd. He recounts that producers responded appropriately and recognized the need to inject a higher level of genetics into the herd for improved future performance and it is an endeavor that has shown great success. Here in 2019, Blach says the industry is performing as per the general expectation with the packing segment the most lucrative at this time. However, he says despite the rising cost of gain, lower carcass weights and a difficult winter, the stocker and cow/calf segment still surprisingly remains profitable on the whole.
"The stocker and cow/calf guys have been pretty seasonal in those markets year to date. Not big margins but consistent margins. So, we've had about two years in a row now where cow/calf and feeder prices have been pretty flat," Blach reported. "But, in general, our cow/calf producers are profitable. You've got producers today that got breakevens at a $1.65 and the low end of producers that have breakevens that are closer to a $1.00. So, a pretty big difference there."
Listen to Blach's full summary of the cow/calf segment's current level of operational success, with Radio Oklahoma Ag Network Farm Director Ron Hays on today's Beef Buzz - brought to you by the American Angus Association. America's breed.
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