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Trade, impending crop top of mind for cattle producers

CattleFax leader says lion's share of herd expansion now behind cattle sector.

Herd expansion, export markets, corn crop expectations and African swine fever ramifications are among the factors that will have an impact on the upcoming U.S. cattle market, Randy Blach, chief executive officer of CattleFax, told more than 700 attendees of the 2019 Cattle Industry Summer Business Meeting, held July 30 near Denver, Colo. Blach was keynote speaker at the opening general session of the meeting, which serves as a gathering for leaders of the National Cattlemen’s Beef Assn., Cattlemen’s Beef Board, American National CattleWomen and National Cattlemen’s Foundation.

Blach told the group that U.S. cattle herd expansion had slowed to a crawl, with the lion’s share of growth behind the industry. That slowing had been expected, he said. Record beef, pork and poultry supplies are having an impact on the market. For that reason, and with record meat consumption expected next year, it’s critical to open export markets and answer trade policy questions, he said.

However, consumers have responded well to the increased quality of beef production in this country, Blach said. There has been a 50% increase in Prime and Choice production over the past 15 years, and 80% of U.S. beef is now Prime and Choice. Beef has captured an additional 7% market share of meat spending from poultry and pork.

“It’s a great, great success story,” Blach said. “We have to continue to be the highest-quality protein provider, delivering products we can stand behind that consumers love.”

Blach pointed out that the average consumer needs to work only 12 minutes to be able to pay for 1 lb. of high-quality Choice beef. “That’s a bargain,” he said.

Corn crop uncertainty centered around the number of acres planted and yield potential is also a concern, because the impact of wet weather in grain-producing segments of the country will not be known until the middle of August, Blach said. Furthermore, ramifications of swine fever in China will add some unknowns to the equation. “We’re looking at a lot of volatility as a result of what’s happening in that part of the world,” he said.

“We have to remember that only 4% of the world’s consumers live in this country,” Blach added. “Currently, 14% of beef and beef byproducts are exported. More than 20% of the value of every fed steer is generated by exports. We need to have more outlets for not only our beef but our poultry and pork.”

Blach said while an economic recession could have some serious repercussions for the beef cattle industry, the bottom line for producers is profitability, which the industry has seen in general in recent history. “If we’re not profitable, we’re not sustainable,” he said. “I do believe we’re going to stay profitable as we go through this cycle.”

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