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CattleFax at NCBA: Opportunity awaits in 2011

Progressive Cattleman Editor David Cooper Published on 22 February 2011

0411pc_blach_regFueled by rising global demands for U.S. beef at a time when the domestic herd continues to decline, beef producers should prepare for steep increase in prices in 2011 – both for beef and feed commodities.

The CattleFax 2011 Outlook Seminar held Feb. 4 in Denver, Colorado during the National Cattlemen’s Beef Association annual convention spotlighted several areas indicating major economic growth based upon the big turn producers saw in 2010. It all adds up to significant opportunity for those in the beef industry, said Randy Blach, CattleFax CEO.

“All the changes we’ve gone through remain bullish,” said Blach. “The supply side of the equation is very positive. The global markets have been responding much quicker than the U.S. market, relative to how their economies have come back.”

The key element has been demand, specifically after the global recession of 2008-09, which took $225 dollars off the price of each head of cattle, Blach said. But in stabilizing demand, the market has reversed quickly – leading to a $100 improvement in the value of cattle all the way down the production line from slaughter to cow-calf producer. Much of that is attributed to the climbing export numbers for muscle cuts and variety meats across the globe.

“We’re not yet back to 2003 level,” Blach said, “but we had nearly a 20 percent improvement in exports this year and that was one of the main drivers.”

For the U.S. demand picture, Blach expects unemployment rates to stay high, but the consumer push for the product will be healthy. In the meantime, herd expansion trends should become more visible within the next 12 to 18 months. And the old reliable standard of higher carcass weights will continue to be the premium that pays.

His warning was for producers not to be concentrating on the record high prices, with so many commodities reaching unforeseen levels. Focus on the margin, he said, and manage the costs and price risks as best you can.”

“We don’t know how high some of these things can get. … We haven’t seen some of these world supplies depleted to the levels they are today.” 

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PHOTO: Randy Blach of CattleFax addresses the NCBA audience in Denver.

 

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