“Monumental” is a title of a recent issue of The Beef, a daily market column written by Cassandra Fish, a beef industry expert with Consolidated Beef Producers. Her column is read and relied on by thousands of industry professionals in more than thirty countries. Senior Farm and Ranch Broadcaster Ron Hays got to talk to Fish shortly after it was published. In the first part of their conversation, they discussed the monumental rally of the cash fed cattle market. Today, they are discussing the red ink that is the reality of what the major packers are facing in the fed cattle market.
The change from profitable to not happened so quickly and deeply that Fish believes it is unsustainable. She said, “You can’t pay $8 or $10 more for your raw material – for your cattle – each week, and then unless you can charge enough for boxed beef prices… You can only lose so much money for so long, no matter what business you are in. From that standpoint, it is unsustainable for them.”
Fish recalled 2013 – 2015 when packers were last swimming in red ink; however, she emphasized the difference this time is that they are losing a lot more money faster.
“There is still a seasonality to beef prices,” she said. “We make our highs on beef prices in the second and fourth quarters and we make our lows in the first quarter and the third quarter. Well, we are in the third month of our second quarter, so we are going to run out of runway, and we’ll see boxed beef prices seasonally set back in the third quarter.”
She described the all-time highs seen in yearling prices this week, and the record highs of commercial pairs. “It is certainly trickling down, but the good news is that we have had some really good moisture in some country,” she said. “There is more hay around than there has been in six years – that’s good news. Corn is relatively cheap.”
Based on the declining number of heifers on feed in the last Cattle Inventory Report, Fish believes that liquidations have halted and the beef cow herd is stabilizing; however, earnest expansion is not yet underway. As heifer calves have become so valuable, producers really have to consider whether to keep or sell.
Fish’s daily market column, The Beef, is emailed out each day for free. Find more information about Fish and her expertise at cassandrafish.com.
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