• Sun. Mar 7th, 2021

Livestock Marketing (1/26/13)


Jan 27, 2021

we want to start off talking with Derrell peel our livestock marketing specialist about the kargil plant closing in Texas a pretty major beef processing plant how did the industry react well it's always a shock when these things happen in terms of exactly when and where it's going to take place and so the markets the futures markets in particular initially reacted pretty negatively I think it will be relatively short-lived in terms of the overall market impacts this plant is a big plant there's about twenty six of these big plants among the four biggest packers in the US so this one plant and you know sizes vary a little bit but this one plant probably represents roughly three to four percent of feedlot or fed steer fed steer and heifer slaughter capacity in the US we knew we had excess capacity so this helps bring capacity back into line with availability I don't think it's going to necessarily make prices a lot lower because there will be plenty of demand in the remaining capacity for the number of animals that we expect to produce in feedlots this year now you mentioned capacity did the industry experts sort of expect this to happen you know there's been some pressure in terms of excess feedlot feedlot and packing capacity for many years and certainly in the last few months in the last several months we have talked about the likelihood that we would see on the packing side at least one of the major plants go offline we could even see another one potentially go offline in the next 12 to 24 months so it's not really a surprise it's always a bit of a surprise in terms of who's actually going to make that decision and win and where it'll take place but the fact that it did happen is not at all a surprise okay so possibly more than it's possible we still probably have some excess capacity in the industry relative to cattle numbers for the next two to four years okay the drought of course huge impact on the cattle industry let's talk about hay production and sort of what the latest crop estimates are and what the situation is there you know USDA recently released their annual crop production summary and that included you know the the hay production and the stocks number USDA measures hay stocks twice a year but the most recent one was on December first and with a significantly lower 2012 hay production in the u.s.

Because of the drought December one total hay stocks in the u.s. is at an extremely low level it's the lowest total u.s. stock level for December one since nineteen fifty-seven so you know two years of drought have have critically reduced supplies in Oklahoma we've had low December one stocks the last two years the 2012 number was actually fractionally higher than 2011 but both of those numbers were the lowest we've seen since nineteen eighty four in Oklahoma so again what's becoming more and more apparent is that forage supplies are extremely tight around the country and you know you combine that with the fact that we ended last fall with the last pasture and range report showing that over half of the country had poor and very poor range conditions with these limited hay stocks that means that we're rapidly running out of resources in terms of being able to maintain cattle production okay and obviously it's going to get better it's going to get worse we got it you kind of got to prepare for both that's right i mean you know it's winter time right now the drought conditions if they persist then things will get worse when when we get to what should be spring and we don't have spring then things will get worse and it will be very critical very quickly for a lot of producers if we get moisture and moderate these drought conditions then things will improve and will you know pick up from where we are and try to go back to rebuilding things a little bit and getting back on track okay and final a word of advice for producers with all this in mind well again you know we're a long ways into this drought lots of folks have relatively limited flexibility yet but I guess the main thing that I would remind producers is that ultimately surviving the drought is not a question of how many cows you managed to hang on to it's really more important that you maintain enough equity in your business so that you have something to rebuild with when this is all over so you know if that little person inside you is telling you you really need to get rid of some more animals you need to go ahead and make that decision sooner rather than later before you completely drain all your resources okay go to my sterile peel our livestock marketing specialists you you

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