Senior Farm and Ranch Broadcaster, Ron Hays, is visiting with the President and CEO of CattleFax, Randy Blach, about the state of the cattle industry and what to expect in the upcoming months.
Hays caught up with Blach on the sidelines of the USMEF Strategic Planning Seminar in Oklahoma City.
“It has been a tough year, but I would say if we really put it in perspective, it has been a pretty tough stretch here over the last three or four years now,” Blach said.
Starting in 2019, Blach said the industry was faced with the Tyson fire, then shortly after was COVID-19. On top of those issues, Blach said, drought came next.
“In spite of some of those headwinds, these markets have performed about as we have expected,” Blach said. “We are going to end up averaging between $1.42 and $1.43 for fed cattle for the year. That is right on the forecast for what we shared with the industry back in January.”
Grain and roughage prices, Blach said, have been the biggest shock to the system.
“We just aren’t generating much profitability out here for cow-calf producers,” Blach said. “That has been very difficult. Even though calf prices are 35 dollars and 100 higher than a year ago, there is still not much money being made.”
There is a high probability, Blach said, that November and December will yield the highest profits of the year. This year, he added, is referred to as a “non-expansion” year.
“We typically take out the spring highs and make higher highs in the fall, and this year has been right on schedule,” Blach said.
As for the drought, Blach said because of the lack of grass availability going into the winter season, not many cattle will be able to turn out.
“This fall, the number of cattle in our winter grazing programs is down significantly so far,” Blach said. “The reality is, even if we do, we have got to remember that our feeder cow and calf supply outside of feedlots is down 800,000 head.”
If rain starts to come, Blach said it will be expensive to buy those cattle and be able to turn them out.
“The market will respond very quickly when we have rain, but keep in mind, there are 800,000 fewer to pick and choose from,” Blach said.
Beef cow slaughter for the end of the year, Blach said, will be around 375,000 head up from a year ago. Heifer slaughter, he added, is up around 300,000 for the year.
“What that tells you is, you are going to be looking at smaller fed cattle supplies for two to three years down the road until you see some stability in that cow or female cattle population,” Blach said.
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