 |
 |
There has been, understandably, a drop in demand for beef the past few months, backing up the supply chain. Cattle in the feedlots are being held longer, so they are heavier when they go to market. These heavier cattle are more apt to grade Choice, resulting in a near-zero Choice-Select spread, and the trend in feeder steer and finished steer prices remains pointed downward. http://www.ams.usda.gov/mnreports/lsddcbs.pdf I'm not hearing of herd reductions locally, and in the Northeast we may remain relatively insulated until calves are sold this fall. As usual, I expect we will have a reasonably strong market this spring for calves from those who are doing a few in the backyard. I'm also not hearing of a drop in demand for freezer beef, but I suspect there must be a softening of that market, too. Meanwhile, the rumblings of cutting the dairy herd continue - this week's Hoard's notes the "sense is that 300,000 cows need to be removed soon". Whether through a federal program, through CWT, or through farm failures, those cows will be coming into the beef market in the next year. Is there a bright side? This winter was the quietest my phone has been with respect to complaints about slaughterhouses - things didn't get better, but at least they didn't get worse. Also, those marketing local beef, who are often constrained by limited supply, may be able to explore new markets in these times of lower demand and higher supply of cattle. For those of us with cattle, it always comes back to feed costs first, and attention to the many other cumulative management decisions second. It is nearly impossible to "manage" your way around $120 per ton hay when feeder steers are under a $1. Looking forward, at some point the cycle will change and those positioned with replacements to sell will get some consolation. If you have cheap feed and are an optimist, this may be the time to be building the herd.