News Release
December 9, 2008

Livestock market expert predicts eventual brighter cattle outlook

The take-home message to producers about the looming cattle market from the director of the Livestock Marketing Information Center (LMIC) was advice straight from the Boy Scouts – be prepared.

Yet the edginess of his presentation to the 200-plus attendees at the Beef Production Convention in Torrington was softened by his parting words: “These are not fun times,” said Jim Robb, “but this is not a bad time to be in the cattle business.”

Robb was the lead-off speaker at the eastern Wyoming/western Nebraska conference Nov. 25. The event, attended by more than 200, was sponsored by the University of Wyoming Cooperative Extension Service (UW CES) and the University of Nebraska-Lincoln Extension.

“We were pleased with the turnout,” said Dallas Mount, UW CES extension educator who helped organize the event.

The beef conventions are held every other year. This was the third. “Attendance was what we were expecting, and I think our speakers did a great job with presentations,” Mount said.

Mount said the most conference buzz came from presentations on developing wind energy on the ranch, and by Trey Patterson, chief operation officer of the Padlock Ranch near Sheridan, who spoke about key management areas and strategies that most affect profitability and functionality of livestock operations.

Robb sees higher cattle prices by 2010, but producers are struggling now. He advised producers to know their cattle; be ready for volatility. “Corn prices will spike up and down,” he noted. “You have to revise what you are doing every three months. If the corn prices are up, recognize that and be prepared for a management strategy for the next three months.”

Three months is important, he said, reviewing the time prices took to stabilize after 9/11 and the bovine spongiform encephalopathy case in Canada. “You have to be managing within those time frames. You have to act quickly or plan to wait three months.”

 He gave an overview of the cattle prices and red meat market demand and behaviors of consumers. “Meat market prices overall are not as bad as what could be given what consumers are doing in the market place,” noted Robb.

Beef cattle production is declining and the supply side will tighten, and the export market potential will decrease significantly. Along with this, total beef consumption is the lowest since 1959, and he predicts that amount will be lower next year. “It will only get smaller the next two years,” he said. “Demand is where the problem is.”

Consumers have quit buying expensive cuts and are buying more chuck, round and hamburger.

“This is a full-blown recession we are in in the United States,” he said. “Consumers have traded down. Restaurants are going out of business. We think the economy will get better next summer. By the fourth quarter of 2009, we’ll begin climbing out of this. We are halfway through this economic meltdown with 13 to 15 months to go.”

He predicts fluctuations in the corn market will continue, and the volatility in the oil market is directly tied to the corn market and calf and yearling markets.

“Volatility in grain and feedstuffs is now embedded in the system, which is influencing the cost of gain in the feedlots,” said Robb. “Cattle on feed is 7 percent below a year ago. After 18 months of losing money every month, more feedlots in the U.S. will exit the business in the next six months.”

Shrinking cow herds are not limited to the U.S. – world numbers are decreasing, he said. The number of cattle in Canada is decreasing faster than in the U.S., and the numbers are also lower in Mexico and Europe.

The LMIC continuously updates forecasts, projections and support materials related to market situation and outlook, according to its Web site (http://www.lmic.info/). The LMIC is a cooperative effort between state university extension specialists, U.S. Department of Agriculture economists, industry cooperators and center staff.

 “We can’t predict the future,” said Robb. “But we work at it every day of our lives.”

Other conference presentations included windrow grazing, the carbon credit program, grazing goats, applications of feeding by-product feeds, yearling/stocker management decisions, value of genetic tests for marbling in beef cattle, forage production with limited irrigation, developing a grazing and monitoring plan and wintering yearling cattle.

Listen to audio clip here.

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Contact: Steven L. Miller, Senior Editor
Phone: (307) 766-6342
E-mail: slmiller@uwyo.edu
Archived News Site http://uwadmnweb.uwyo.edu/UWAG/news.asp

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