After an incredible 2014, the year 2015 has not been nearly as kind to cattle producers when you take a look at the cattle markets. The feedlot sector has dealt with losses and red ink. For the cow-calf end of the business and for stockers, the volatility has been tough to stomach. Radio Oklahoma Ag Network Farm Director Ron Hays caught up with Rabobank Protein Analyst Don Close at the National Association of Farm Broadcasting in Kansas City, Missouri last week. He said it’s been a tough year.
“This market has absolutely been as rough as it gets, certainly for the margin operators, there just hasn’t been a fair shake really at any point through the year,” Close said.
The downturn started in August when the market began to trade sharply lower. Close agrees with the position of many analysts in attributing the fall in prices to the large carcass weights, but the situation is bigger than that. He said three big components caused the erosion in the market. First being the increase in beef tonnage. Second being consumer pushback over retail beef prices and lower prices for competitive protein sources. The third element was the U.S. beef import and export situation. With the strength of the U.S. dollar, Close said that has attracted massive amounts of beef imports into the U.S. That has been compounded by the drought situation in Australia and New Zealand. The strong dollar has also hurt the U.S. beef exports. Overall, this was a tonnage issue instead of a numbers issue. Close said U.S. cattle on feed numbers were still very manageable.
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