Future of Beef Industry May Rest With Cattlemen

AMARILLO, TX – As cash cattle prices hold the line between $118 to $120 per hundredweight this week, the online Cattle Market Report suggests that the assault on beef producers has been unrelenting and calls for government investigations in the obscene profits of the processors will only find no illegal activity.

“Unfortunately there is nothing illegal occurring – no collusion, no price fixing, no restraint of trade” the author says. “Processors are simply taking advantage of under capacity in the beef processing plants of the nation by letting producers drop asking prices to a point where they can buy a slaughter slot.”

Of course, this is happening at a time when beef demand is hitting all-time highs.

Right now the feeding sector is dealing with high corn prices, which keeps them from easily finding profits, Then factor in that there can be no increase in competition when the industry lacks sufficient processing capacity.

One suggestion for feeders is to move from corn to wheat and save around 10 percent in input prices. Live sector beef production, with record corn prices the Cattle Report adds. “can not be sustained with producers receiving $120 or $130 for fed cattle when packers could pay up to $165 before losing money: the sharing of margins will correct at some point.”

So what is the solution, “the last ditch option is culling the cow herd. If the industry can’t encourage more beef plants, the herd must be smaller to restore balance to the marketplace. Some natural culling will occur during periods of drought (but) culling because of insufficient prices, fails to respond to the needs of the marketplace that is calling for more beef.”
(SOURCE: All Ag News)