In today’s beef buzz, Senior Farm and Ranch Broadcaster Ron Hays continues his conversation with Randy Blach, CEO of CattleFax, to discuss several key trends shaping the beef industry. Blach began by noting one of the current “silver linings” in agriculture: low feed costs. “Corn is cheap, beans are cheap, wheat is cheap, everything’s cheap right now,” Blach said. He acknowledged that the broader farm economy has been under pressure, with prices “very depressed below the cost of production,” but explained that this has been “to the benefit of not only beef producers, but pork and poultry producers as well.” According to Blach, all protein sectors are currently “profitable” thanks to these lower feed prices.
When asked about trade with China, Blach pointed out that the nation’s absence as a beef buyer hasn’t been as damaging as it might seem. “The China market was our third biggest market before we were closed out of it back in April,” he explained. “Normally… that would have been six to eight dollars a hundred impact on our fed cattle markets. We haven’t noticed that.” Tight cattle supplies, he said, have offset the trade loss. He also highlighted that per capita beef consumption has held steady at “right at 59 pounds this year,” due in part to strong demand for ground beef. “Ground beef demand has been out of the world,” Blach said, noting that “nearly 53% of the beef consumption in the U.S. this year will be in the form of ground beef.”
Blach emphasized that the current state of beef demand is historically strong. “It’s a big deal,” he said. “We will be at a 40-year high this year.” Reflecting on past decades, he noted, “A lot of us lived through the 50% loss in beef demand we went through from 1980 to 1998—now we’re back to a 40-year high.” He credited this resurgence to the industry’s commitment to quality: “A real tribute to the industry getting focused on quality, doing it right day in and day out… putting a consistent product out there that consumers can trust and count on.”
Looking ahead, Blach expressed cautious optimism about consumer demand amid rising prices. “I think that consumers will hang with us,” he said, but warned that “retail beef prices are $1 a pound higher than they were a year ago… and they’re still going up.” He said producers should “be brave for some consumer pushback at some point,” as higher prices could cause some buyers to shift purchasing habits.
On the outlook for cattle producers, Blach advised prudence in the face of uncertainty. “I think we’re going to be fine through the balance of this year,” he said, but cautioned that “this is a very risky environment.” He encouraged producers to “have some options, or LRP something,” referencing the Livestock Risk Protection program as a valuable tool. “I know we’re all enjoying selling cattle at these prices, but we’re also buying cattle at these record high prices,” he said. Blach concluded by highlighting the modern tools available to manage risk: “LRP is one of those game changers… rainfall insurance is another… and the options markets are a very viable tool for producers today.”
