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Beef Market Adjusting To Huge Increase In Supply

 

by Ken Root

Listen Here: Profit Matters 10-25-16

Beef and Pork producers have increased production sharply. As a result, prices for both commodities have fallen sharply. Now the beef industry is trying to react to millions more pounds of beef coming to market each week compared to last year.

The price of cash cattle continues to falter and the period of profitability seems to be a fading memory.

Jim Robb is with the livestock market information center. Ron Hays, farm broadcaster from the Rural Oklahoma network spoke with Rob about the falling cattle market.

The ride for the beef industry that started with drought and high corn prices eight years ago is pretty much over. Now the cattle and swine industry have filled the needs of the domestic market place. Now the market has to build demand here and around the world.

“Difficult to tell,” Robb said. “It’s always difficult to call a bottom whether we’re looking at the futures market or the cash market.”

Robb says prices are softer, but he insists there is more to the story. He says looking at the past week, beef production was up 25 million pounds from the same week a year ago.

“Which doesn’t seem like a whole lot,” Robb said. “But if we look back over total red meat and poultry over the last five weeks, it’s averaged up 54 million pounds every week above a year ago.”

The difficulty here has been the whole marketing chain adjusting to this huge increase in beef production, says Robb, extending all the way through to the grocery stores and restaurants. Robb suggests it takes some time for this adjustment to work its way through completely and believes it is not quite there yet.

According to the latest Cattle on Feed report, the numbers show fewer placement, bigger marketing’s and roughly the same number of cattle on feed as of October 1 of this year, compared to last year.

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