A third column grappling with some of the baffling claims regarding international trade. The focus here is specifically on the noise surrounding the imports of live cattle.
Do America's trade policies push ranchers out of business? That's a protectionist's view, but there's no evidence suggesting ranchers “displaced” by beef imports – nor being unduly damaged in the marketplace.
There's a lot of rhetoric surrounding beef trade that we shouldn't accept at face value. A closer look at the data shows America’s ranchers are the direct beneficiaries of international trade.
Sine 2000, per capita domestic spending for beef has grown at about $11 annually, and Prime and Branded sales account for 60% of those new dollars since 2005. Marbling is the difference maker.
Even as consumers are sensitive to higher prices, beef demand remains strong. Increases in beef's overall quality and uniformity over the years has spurred that demand growth and marbling has been the difference maker.
Cattle are NOT fungible – value differences across the slaughter mix is enormous. Precision pricing – via a grid – makes a huge difference and attempts to mandate arbitrary levels of live cash trade negates that reality.
The reliability of marbling is making a difference – and cattle feeders are taking advantage. With real dollars at stake, more cattle are committed to negotiated sales and betting on the grid is paying off.
Inflation has hit food prices especially hard, but higher prices haven't driven consumers away from beef. Why is that? The Checkoff-funded National Beef Quality Audit provides some clues.
This is the third in a series on Livestock Risk Protection. The previous two addressed misperceptions of market impact from LRP. The remaining topic – subsidy harvesting – is the most interesting and controversial.
Do cattle producers have the narrative correct regarding the impact of LRP? Some assumptions may be completely disconnected. Let’s revisit this still-kicking horse.
When we let ourselves focus on outside influences we are succumbing to defeatism. The better approach is to focus on those things you can control: you versus you.
Imports and exports [both product and cattle] create value and provide opportunity for all trading partners, thereby underpinning the reason international trade exists. A review of data confirming the value of trade.
There remains a lot of noise around the issue of LRPs in the cattle markets. That was best described by one of my readers last week: “[most of the critics] don’t even understand the facts, let alone the myths.”
Following up on a recent column, Nevil Speer reports on the advice from a seasoned grain analyst: Three things that you should do for success in 2024, plus, four things NOT to do. Remember, it's "you versus you."
The most important thing largely revolves around our perspective, and subsequent management, of risk (or lack thereof). Eleven essential tips for risk management.
LRP insurance is straightforward, versatile, and makes risk management readily accessible to producers. And that’s more important than ever; record prices translate to heightened equity risk.
LRPs and options are essential risk management tools, but coffee shop talk suggests LRPs are driving the cash market lower. Let's examine the data to keep the discussion measured and objective.
Some blame the recent rout in the futures markets on LRP (Livestock Revenue Protection), a claim that is wholly unsubstantiated. A look at the data confirms LRP blame really is a smoke monster.
There seems a belief that speculators – either too many or not quite enough – are solely responsible for driving the market one direction or another. But bashing speculators is what people do who don’t like the price.
Cattle futures markets have come under criticism lately for their volatility. A common theme is there are "too many shorts" or "too many longs." That ignores the fundamental fact that futures markets must come in pairs.
A snowballing effect from several factors has led to the present market flush in cattle futures and provides a stark contrast between emotion and factfulness.
USDA’s regular October reports provided insight about future beef production. Any thoughts of herd restocking that may have existed earlier have been put on hold for now.
Beef’s critics see an industry that is corrupt and/or broken with NCBA and packers padding their pockets. The facts tell a different story. Beef is winning the marketplace…and it’s not even close.
Profitability challenges in the dairy sector make the value of beef-on-dairy (BXD) calves more important and underscores the reality that dairy cows are now on double duty.
Prices for day-old beef-X-dairy (BXD) calves are often surprisingly high. But what used to be a highly discounted after-thought (straight dairy calves) is rapidly transforming into a meaningful source of production.
When considering the capital commitment required to maintain a cow over her lifetime, genetic testing is really a financial risk management tool and an investment in total herd profitability.
The demise of cattle feedlots is a talking point often used to stir emotion among those in the industry. How might such claims be argued in court where alternative facts are usually exposed under cross examination?
More days on feed means more opportunity for something going wrong – ultimately ending in increased death loss. Preventive illness management before arrival is more important than ever.
There’s mounting evidence of a protracted cattle cycle because whatever happens from here, Speer says, next year’s starting cow herd number will be down sharply.
Given the value of the current fed market, widening quality grade spreads and longer feeding periods across the industry, the importance of preventing BRD has never been more important.
Despite the misrepresentation from some groups, your beef checkoff has paid huge dividends. And given that producers fund the program, there’s an obligation to portray the program factually. Here are some facts.
Agriculture is changing rapidly; that inherently creates tension. However, producers who operate believing “success is within my control” are the ones most likely to succeed amidst the turbulence.
The discussion below highlights several items because of their potential influence on the industry over the long run. They’re addressed in no particular order; each one is independently important.
Cattle markets this summer have often provided a wide regional basis with cattle in the North trading well above futures. That's not to be misinterpreted as indicator of a broken market.
Beef consumption vs, beef demand, a topic that continues to generate confusion. But it should be clear, per-capita consumption, "independent of prices, provides no meaningful information about demand.”
Consumption data are often used to mislead and undermine the beef industry’s accomplishments and disparage the Checkoff. But such data in the absence of price data provides zero information about beef’s competitiveness.
Through 30 weeks, the 2023 cattle and beef markets have exceeded even the most bullish of forecasts. How does this year’s cattle market compare to 2014? Price only tells part of the story.
Disciplined hedgers protect themselves against noise and volatility – the very essence of why futures markets exist, and why smart feeders use that tool.
Whether futures markets are friend or foe often depends on our understanding of those markets and
whether we can ignore the drama and use facts to make decisions.
Further discussion about cattle markets leads our columnist to conclude: producers are “prone to have high confidence in unfounded intuitions” and we often derive conclusions based on incomplete information.
Record packer margins were the tipping point to attract new capital to the business. There is now angst packer margins will be too low and these new companies won’t survive. But should we encourage government meddling?
Higher cattle prices have calmed much of the producer angst about the market not working. Now seems like a good time to analyze how we think about factors that drive prices.
Successful ranchers learn to remove emotion from a situation. They subsequently they double down on the cost management side while also becoming more focused on value-added marketing strategies.
