GRAND ISLAND, Neb. and AMARILLO, Texas – Cattle producers gathered at Feeding Quality Forum in Grand Island, Neb., and Amarillo, Texas, recently to discuss many top-of-mind topics including the ongoing drought, high feed prices, the shrinking cowherd and beef demand, and to share ideas on how to best deal with these and other ongoing challenges.
Pfizer Animal Health, Purina Land O’ Lakes, Certified Angus Beef LLC (CAB) and Feedlot Magazine co-sponsored the seventh annual meetings.
“When I look at profitability, our biggest problem is the cost of feed going forward,” said market analyst Dan Basse, of AgResource Company, who called the US Department of Agriculture’s corn yield estimates high. “If we lose another billion bushels of corn, which I think is more and more likely; somebody will have to go without.”
Cattle feeders may still have a slight advantage due to the poor quality of much of the crop, both in terms of low test weights and Aflatoxin problems. Basse said cattle can use that more readily than other species and feeders may get some relief in terms of discounts.
“We are not in the camp that this corn crop is getting better,” Basse said. “The only good news we have for all of you is that this is really bad quality corn.”
Higher feed costs may be recouped, in part, by feeding cattle longer and selling on a carcass weight rather than a live price, according to data from Professional Cattle Consultants. Those economics will drive carcass weights even higher, reinforcing a trend that’s been on the upswing since the 1960s, predicts analyst Shawn Walter.
“As we think about increased carcass weight, we assume once it gets past the feedlot that it’s all negative,” he said, but the packers and distributors feel the effects of smaller cow numbers, too. More pounds overall is a positive, and “as carcass weight increases, you see quality grade increases as well.”
The really big outliers slow the chain speed…“and if they stop the chain, it can take a whole day’s profit out of a factory,” Walter said.
A demonstration by Phil Bass, Certified Angus Beef (CAB) meat scientist, showed how those end-users deal with larger primals by fabricating a beef rib into cuts. He walked the crowd through creative cuts, with knife in hand, like a rib filet and cucina steak that have helped mitigate the challenges of portion cutting in heavier carcasses.
CAB works with its partners on education and marketing with these new cutting styles. “We’re using what you folks are producing and try to make that connection and that balancing act, because if they don’t eat it you’re out of business,” Bass said. “Carcasses aren’t getting any smaller.”
One main factor keeping beef tonnage up will be high final weights, he added.
The total size of the cattle industry has been shrinking rather abruptly for the last couple of years, said Mike Sands of Informa Economics. The January 2012 total was 90.8 million cattle. “And that’s not the bottom,” he added. “If we started today, the earliest I see this inventory turning around is 2015.”
This means for cattle feeders there will be fewer cattle, calves will cost more and managing risk is a must. There is no room for waste at any level of the food business, and that includes the packing plant forward, Bass said.