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Agrimarketing : November December 2009
by negative feeding margins, cattle feeders are long past the acting part. They're simply trying to hang on until the economy and beef demand take an upward turn. I was sitting in the sale barn the other day watching feeder calves sell for a lot less than they should have when a rancher asked when I thought the fed cattle market would turn. I told him he had the wrong person --- I predicted last summer. "Me too," he said and turned back to the bidding. Was he enthusiastic? Nope. Was he optimistic? He wanted to be, because that's his nature. But with weather and market volatility and macroeconomics and intrusive gov- ernment regulations and a host of other things all stacking up, he's just holding on until things get better. That seems to be the overriding sentiment as I talk with cow-calf producers and cattle feeders. They're optimistic, because that's the only way they know how to be. But they're worried. "This deal isn't as much fun as it used to be," I over- heard one tell another, "what with costs as they are." Bottom line, I completely mis- judged the depth of the drop in con- sumer demand this year. It's small consolation, but I wasn't alone. The 2009 cattle market was demand dri- ven and con- sumer beef demand, particu- larly for the higher-valued middle meats, has been off signifi- cantly --- especially in casual dining and high end restaurants. According to Cattle-Fax, if we had the same demand as a year ago, the fed cattle market would be averaging $94- $95/cwt. instead of the current $83-$84 average. That product has shifted to the retail channel, but it's not good news in cattle country when grocery stores promo ribeyes at $4.99/lb. Prognosticators say it will turn, that the supply side of the equation will kick in and when it does, things will get good once again in cattle country. When that will happen is, of course, the subject of much arm waving, with predictions ranging from the second quarter of 2010 to some- time in 2012. It will depend on when the U.S. economy turns to the point that consumers feel more comfortable about changing their spending habits and whether or not the current crop of politicians allows the cattle industry to be competitive in the global and domestic marketplaces. Both those are fraught with much speculation. But remember this always --- optimism in cattle country shines with every sunrise. Cattlemen have been through this before, and even though the current peristalsis will change the business, perhaps in ways we don't yet comprehend, cattlemen will persevere. The long-term outlook is very good, and those who survive and adapt have a bright future. AM 24 Agri Marketing November/December 2009 BETTER TIMES AHEAD/continued from page 23 Rutherford One Million New Scientists. One Million New Ideas. TM It wasa 4-H experiment in circuitry that sparked the imagination of a young girl, that became a passion for technology, that led to the mobile devicesthat connect people around the globe. Companiesand universitiesaround the country are embracing the 4-H commitment of fostering one million young scientists and engineers over the next five years. With their help, 4-H isgrowing the next generation of great thinkers. To learn more about America's largest youth development organization, visit www.4-H.org.
Marketing Services Guide 2010
World Ag Congress