The economic environment of both the beef and pork industries has changed. Capacity utilization for both beef and pork has a significant impact on margins and the market impact goes beyond supply and demand.
The beef market has become increasingly dependent on consumer demand – consumers who are both willing and able to continue purchasing beef at higher prices.
The demand side of the equation has become increasingly crucial to the market’s performance as the per capita beef supply will decline in response to tighter cattle numbers.
Economics and the impact on weights – both longer-term and decisions based on short term factors will play an important part in determining beef production in 2024.
Activists will intensify their calls to end grazing and beef production over the next several years as climate change and carbon emissions become the priority as opposed to just protecting the environment.
While tighter cattle numbers and further declines in beef production will support higher prices, demand will increasingly become the critical market driver in 2024.
USDA's recent October 1, 2023, Cattle on Feed report offered a few surprising numbers. How does that report square up with previously released USDA data?
Prices across the entire beef complex have reached record levels. Demand remains the key variable, and now may be the time to measure demand through the value of the various cuts of the carcass.
Two years of herd liquidation confirm that cattle numbers are extremely tight with record prices the result. Now is the time to plan and manage for your future.
The state of the U.S. beef industry in 2023 is strong. Drought-induced herd liquidation impacted the supply side, but an even greater impact occurred on the demand side.
Market prices for beef and cattle impact margins and short-term decisions at every level of the supply chain, but decisions concerning long-term financial health are driven by factors that may lead to structural change.
The well-defined costs of ranching and farming are often the focus of managing the business, but little watched regulatory costs can often become a burden to business operators.
With estimates of 82% capacity utilization of fed beef plants next year and 65% for cow slaughter plants, Nalivka says, “Rest assured - there will be decisions made.”
The foundation for consumer beef demand is not just quality, but consistent quality. Consumers want assurances the beef product they purchase today will be of the same quality as the beef they purchased last week.
Further processing of value-added products for direct sale to end-user customers in both retail and foodservice will increase over the next five years and help feed the growing global consumer demand.
Increasingly, U.S. and global agriculture are rapidly adopting a system driven by government regulations. Such regulatory activity should concern us all.
With a lower cattle inventory, per capita consumption will be the lowest since 2015.But while 2023 beef production will be down 6% from last year, it will still be 3 billion pounds greater than 2015.
Market economics go beyond supply and demand and other key drivers are becoming increasingly meaningful in the current market environment including adjustments to production capacity.
With extremely tight cattle numbers, how quickly can producers expand their herds - if at all. Drought and slim margins mean expansion will be a rather slow-go with many ranchers taking a wait and see approach.
The need for telling beef’s story to the general public, to both beef consumers as well as non-consumers, has become increasingly important and critical to the long-term success of the industry.
Both the inventory of beef cows and total cattle numbers in 2023 will be the lowest since 2014. After seven years of low returns, ranchers now look forward to 2023 with prospects for significant profits.
Retail beef prices are higher, but the more relevant prices are featured prices on the ads that are reported every week by USDA and provide a much more realistic picture of retail meat case activity.
Is the U.S. government attempting to take charge of our food system? John Nalivka suggests current funding programs aimed at strengthening the U.S. beef industry are at odds with the dynamics of the industry.
Carbon counting – which is ill defined – may be one more regulatory hurdle akin to federal lands grazing management plans with somewhat undefinable outcomes but are ridden with regulations.
With rebalancing of the cattle market comes a shift in margins favoring cattlemen. The beef industry outlook going forward hinges on the availability of forage for grazing.
USDA just announced “major actions” to “spur competition, protect producers, and reduce costs." Such an announcement might be more intimidating to the free market than helpful.
The current phase of the cattle cycle favors ranchers and cattle feeders as 2023 approaches, says John Nalivka. Are there downsides to the current expectations for cattle markets over the next year?
American ranchers continue to face challenges to end livestock grazing on federal lands. We must remain vigilant to those challenges in order to contribute to U.S. agriculture, the food industry and the U.S. economy.
The positive shift in beef demand over the past decade has been supportive of beef prices, but we should be cautious about assuming that demand will remain at such a high level.
Our inflationary situation is solvable. Energy costs are the most significant driver to inflation across the beef supply chain – gasoline at the pump for consumers and diesel fuel for production and distribution.
When it comes to feeder cattle prices, 2014 was a year to remember. What if we apply those prices to today's cattle feeding scenario? How would margins fair?
On May 26th USDA announced three initiatives as the first of a “suite of major actions under the Biden Administration to create fairer marketplaces for poultry, livestock, and hog producers.”
Beef prices have been notably higher this year and demand will remain key as supplies tighten into 2023 with consumers continuing to face ramped inflation.
Rather than running to the politicians to solve a problem, perhaps the better strategy might be to gather a plan to create a better understanding of the economics of the industry.
Through the week ending March 26th, beef cow slaughter year-to-date is 16% higher than a year earlier and the highest since 1986, and we're on pace to slaughter 12.3% of the cowherd.
Inflation has hit consumers hard and drawn the attention of the national media. With increasing media attention on climate change, do activists see inflation as a way to encourage Americans to reduce beef consumption?
Cattle prices are improving in all regions as cattle numbers have declined. Expansion and continuation of the current drought could cut cattle numbers even further and produce higher cattle prices.
While markets are one component of the cattle cycle, the critical factor driving the cattle cycle and the cow-calf sector of the cattle industry is forage.
Production efficiency is key to sustainability including profitability, both at the ranch and for the industry as a whole, but that production efficiency doesn’t end at the ranch gate.
Is the Biden Administration's plan for the beef industry workable, or does it ignore the economics of market structure and pricing across the meat industry supply chain?