Getting cattle bought right. That’s normally a feeder’s first challenge, but today it’s just plain getting cattle.
Speaking at the Feeding Quality Forum in Grand Island, Neb., and Amarillo, Texas, in late summer, Sands said he expects that to shrink another million head or more by January 2013.
“We’ve seen some extremely tight packer operator margins over the last year. That’s unsustainable. We’re looking at sizable cattle feeding losses at the present time. Those are unsustainable,” he said. “It probably boils down to some change of the structural capacity in the industry.”
Fewer cattle will eventually mean fewer yards to feed them and packers to process them.
“There’s not enough to go around,” he said. “There are going to be some empty pens. I want that guy to have an empty pen, not me.”
For the first time in five or six years, 2012 started out with some cattlemen in the central Plains retaining heifers above the previous year’s levels.
“And if the weather had cooperated, we’d probably be in the midst of cowherd [rebuilding],” he said.
But it didn’t. Forage availability trailed off as temperatures and feed prices went way up.
“Cow-calf margins obviously have shrunk,” he said. “So the incentives to hold back heifers and turn numbers around, right now, are pretty much nonexistent. Except that everybody recognizes there’s a carrot out there or a pot of gold somewhere at the end of the rainbow and, ‘I’m going to be there when this thing turns.’”
Throw in a still-sluggish economy and slower exports and the script for lower domestic beef demand has been put in motion.
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