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Agrimarketing : November December 2008
FOCUS ON:MARKETING TO BEEF PRODUCERS STATEOFTHEBEEFMARKET TEN LARGEST BEEF PRODUCING COUNTRIES—2008 Tons (billions) %of Ten Largest 1. United States 2. Brazil 3. European Union 4. China 5. Argentina 6. India 7.Mexico 8. Australia 9. Russia 10. Canada 12.3 9.2 8.2 6.3 3.2 2.7 2.3 2.1 1.3 1.3 Total 48.9 25% 19 16 13 7 5 5 4 3 3 1. Texas 2. Kansas 3. Nebraska 4. California 5. Oklahoma 6.Missouri 7. Iowa 8. South Dakota 9.Wisconsin 10. Colorado Total for ten largest U.S. total TEN LARGEST STATES—2008 Number Head (in millions) %of U.S. 13.8 6.7 6.6 5.5 5.4 4.3 4.0 3.7 3.4 2.8 56.2 99.7 14.3% 6.9 6.8 5.6 5.6 4.5 4.1 3.8 3.5 2.8 57.9% Photo courtesy of USDA NRCS. ROUGHGOINGFORCATTLEPRODUCERS Editor’s note: To provide agri-marketers with the current state and outlook for cattle producers,we invited editors of several prominentmagazines that serve the industry to provide their comments. CHALLENGING YEAR FOR CATTLE FEEDERS by Steve Cornett Editor Emeritus, Beef Today Between the impact of grain prices being driven under the influence of ethanol, commodity funds drowning market signals in cash, a cattle cycle that seems not to be cycling and still- weakening beef demand, 2008was sort of challenging for commercial cattle feeders. While thosewho took advantage of all the “funnymoney” that kept cattle futures far above cattle prices formost of the year had a great year —“best I’ve ever had,” said one of the biggest feeders in Texas—the normwas another year of losses. “Earlier this yearwewere seeing 38 AgriMarketing s November/December 2008 losses as high as $200 a head, largely due towhatwewere paying for feed,” outgoing President of the Texas Cattle Feeders AssociationWalt Lasley told his group in early November. “The government’s drive to find new forms of energy was hurting us with $8-a-bushel corn. “Meanwhile, Cornett the traditional forms of energywere also hurting uswith gasoline run- ning up around $4-a-gallon and diesel above $5. Sowhether itwas corn for ethanol or good old fossil fuel, energywas really putting the squeeze on us.” Things picked up later in the year, but the drops in cash cattle prices associatedwith the October financial crash pushedmost of the feeders back into the red. And there seems to be no end in sight to the industry’s ongoing need to get pen space in linewith cattle numbers. Randy Blach of Cattle-Fax told the Texas Cattle FeedersAssociation annual convention that he doesn’t expect to see any growth in the cow herd during 2009. In fact, he expects to see another decline in the supply of calves thatwill bemoving to feedlots. What’s happening, he noted, is that the beef industry is producing more beef fromfewer cattle—and that has left the post-weaning seg- ments of the industry over built. Many feedyards are for sale in the Great Plains, and brokers say the supplywas far greater than the num- ber of buyers even before the Octo- ber financial scare. The bright spot has been exports. U.S. beef had regained almost three quarters of themarkets lost after the discovery of BSE in the U.S. in 2003 before the financial crisis. (more on page 40)
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