CALF_News_June_July_2019

26 CALF News • June | July 2019 • www.calfnews.net food distribution system,” Machen said. “About 30 percent of Millennials already buy groceries online and get curbside service. “Generation Z has always been wired and connected. They expect it [infor- mation, consumables, etc.] to be there. Kroger [supermarket] is already partner- ing with Pinterest. Meal kits [and other convenient food kits] are a hit.” Machen said the three-legged stool that describes sustainability – economic viability, the environment and social acceptance – will grow weaker.“Con- sumer’s don’t worry about our economic viability,” he said. “Younger consumers are highly con- cerned about climate change. And we are naive to say it is not going to con- tinue. Climate change is this generation’s Vietnam.” Consideration of future beef exports should receive more emphasis. With the growing global Middle Class, U.S. beef exports amount to $320-$350 per head, Machen said.“That [value of exports] will be a critical part of where we are in 2039.” Pressure from“fake meat” will con- tinue to grow as the anti-beef crowd grows.“The UK wants a meat tax,” Machen said, urging producers and feeders to recognize the threats from anti-beef groups. “We don’t want the beef industry to be included as a sin tax.” The cost of quality Carcass quality has improved dramati- cally in recent years, thanks to better genetics and better production methods. But what about the cost of producing higher quality cattle? During a TSCRA School for Success- ful Ranching session, Mark McCully, Certified Angus Beef® (CAB®) vice president, said the exact cost of produc- ing better cattle is unknown. However, studies indicate that taking measures to improve carcass quality can also improve reproductive quality. “The Angus cow is the unsung hero of the CAB program,” McCully said. CATTLEFAX UPDATE TIGHTER COW-CALF MARGINS BUT STILL EXPECT A PROFIT Cow-calf producers should still see reason- able profits this year. But with “a fuller” cattle pipeline from producer to packer, producers will likely have less price bargaining power, said Randy Blach, CattleFax CEO. Blach presented his annual CattleFax indus- try analysis at the Cattle Raisers Convention in Fort Worth in late March. With beef cow numbers still above 31 million, there are few signs the pipeline will unclog any time soon. Those pipeline numbers for 2019 include about 3 million more beef calves, 3 million more feeder cattle and 1.5 million more cattle on feed. “So as cow-calf producers, you will lose a little leverage to stocker operators and cattle feeders,” Blach said. “We will see elevated placements into feedyards heading into summer. Feeder cattle are already priced toward the summer at about $150/cwt. [with continued volatility].” CattleFax anticipates an average profit for average cow-calf producers at about $150/head. “For top producers, that should be about $250/head,” Blach said, noting those profit numbers are positive for the beef business. “If the cow-calf producer is profitable, odds are the industry is healthy.” Calf prices remain close to early-year CattleFax projections of about $165/cwt. for five-weights. Feeders are pegged in the $140s. “Don’t expect cash feeder markets to price into the $160s,” Blach said. Live cattle markets were trading at about $115/cwt. in early May and are expected to see their lows in the $100/cwt. range in late 2019. And they could dip below that range the next few years, as cattle numbers remain high. Blach said larger cattle numbers are also pressuring slaughter facilities. “There are 7.5 percent more cows [available for slaughter] than there is in slaughter capacity,” he said, pointing out that several new and expanded facilities will hopefully relieve some of the pressure. AFRICAN SWINE FLU – “THE WILD CARD” With the catastrophic situation surrounding African Swine Flu and pork production in China, the impact on U.S. pork and beef prices could create more volatility. About 50 percent of the world’s pork production is from China, Blach said. But with lost pork production caused by the disease surpassing more than 27 billion pounds, U.S. pork and poultry are finding more markets in China. “China is a moving target,” Blach said. “When you get into global markets, you interject a lot more volatility into meat markets. “I don’t expect a huge increase in U.S. beef going to China. For China and other markets, we have to win with the quality of our product when competing with pork and poultry.”  TSCRA Continued from page 24 CattleFax CEO Randy Blach sees tighter bargaining power between cow-calf producers, and stocker and feedyard operators.