Rabobank’s senior beef analyst, Lance Zimmerman, talked in depth with Oklahoma Farm Report’s Ron Hays about producer attitudes towards the beef market and the importance of filling out surveys.
Overall, he says that most producers are quite satisfied with the current market conditions.
“If you would have told producers at the beginning of 2024 that we were going to see record high retail beef prices, set thirty-year highs in demand, feedyards would keep finding cattle and supplies would be steady to higher for the year, and that prices of cattle would move higher across the board regardless of cattle class, I think everybody would have taken that,” Zimmerman said. “But that’s where we are!”
High consumer demand offsets the ability to find more supply whether through increased feeder cattle and calf imports from Mexico and Canada, increased carcass weights, or just finding ample placements in the feedyards throughout the year.
Zimmerman admitted that he was surprised that supply has remained so strong. He said, “When we saw the January 1 Cattle Inventory Report, the feeder cattle and calf supply outside of feedyards was down more than seven percent year over year. Right now, placements through September are down about four percent. Down, yes, but not as much as we would have expected from the cattle inventory report.”
While he considered drought as a contributor, he knows that drought is often a very common factor. “I think the bigger source to explain some of it is that feeder cattle import number from Canada and Mexico is up more than fifty percent year over year to 1.1 million head for the year. That’s about 500,000 head more than what we saw last year at this time.”
Zimmerman questioned whether the government is getting good data from the cattle industry. The annually published Response Rate Report has shown a marked decline in producer participation in the surveys every year since the COVID pandemic. Ten years ago, eighty percent of producers were participating in the surveys.
“The most recent Cattle On Feed data suggests that we are only returning about sixty-five percent of those surveys. The Cattle Inventory Report is seeing less than fifty percent participation,” Zimmerman detailed. “What kind of errors are we getting in that data because we aren’t submitting data back to the government?
“I get it. We want to maintain our independence from the government, and we don’t want them poking around in our business, but if that is the case, then we forfeit the right to complain if the data doesn’t look like we think it should.”
Zimmerman emphasized that there is nothing to lose and everything to gain by providing the requested data. “We can have more confidence in those market reports and in the fundamentals of what is going on in the countryside so that as producers and as analysts, we can guide each other in making the best decisions for our individual operations and the future of the industry as a whole.”
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