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January 21, 2013


MARKETING...

tonsor_glen
Glynn Tonsor

In the Markets

Synthesizing a cloudy crystal ball for 2013 and beyond.

As industry stakeholders return to their normal routines following completion of the holiday season it is worth taking a moment to ponder some of the broader factors driving the economic situation facing the U.S. beef industry. The core fundamentals of historically tight beef supplies and the important role of beef demand strength are well-established in existing articles. Beyond those important points, here are some broader trends that producers should monitor. Namely, producers are encouraged to expect:

… uncertainty “outside” the cattle industry to persist. Topics including weather, federal budget debates, regulations, farm bill details and a host of other issues beyond the control of individual producers will continue to underpin an environment of higher uncertainty than most producers are used to and likely comfortable with. This elevated uncertainty will result in reduced or delayed investment (e.g., expansion of the national beef cow herd) and decreased desire to “stay the course” by some entities operating in sectors with expanding excess capacity concerns (e.g., feedlots and processors). Read more.


Cargill Closes Texas Plant

Plant closing affects packing capacity, prices of feeders and feds.

Live cattle futures collapsed in Jan. 17 trading as Cargill announced that it would sharply reduce packing capacity in light of limited cattle supplies in the Texas Panhandle. According to the Cargill press release, their plant in Plainview, Texas, will be idled following the results of “an exhaustive analysis of the regional cattle supply and processing capacity situation in North America. … Increased feed costs resulting from the prolonged drought, combined with herd liquidations by cattle ranchers, are severely and adversely contributing to the challenging business conditions we face as an industry.”

The closure will affect 2,000 employees at the Plainview facility. According to the Cargill website, the facility had a processing capacity of 4,650 cattle per day, making it one of the larger plants operated by the company. According to data from Cattle Buyers Weekly, Cargill operated eight plants in 2012, with a total daily capacity of a little more than 30,000 cattle per day. Some of those cattle (about 14%) were non-fed cows and bulls, however, so the total steer and heifer packing capacity was a little more than 26,000 head. According to the data available to us, and this is for most but not all U.S. beef packing plants, the Cargill Plainview plant represented about 4% of the steer/heifer slaughter capacity. Read more.


Farmers Fight

Students take part in telling the beef story.

At Texas A&M University in College Station, Texas, “Farmers Fight” can be heard being yelled by 86,000 people on a college football gameday. It is also the name of an agricultural advocacy movement begun by Texas A&M students with the goal of “making agriculture an Aggie tradition.”

Mason Parish, Jasmine Dillon and Victoria Pilger are all students at Texas A&M and are the founders of the Farmers Fight group. The group was started because agricultural students were tired of hearing negative coverage in the local media and because many of their fellow students knew nothing about agriculture. Through the Farmers Fight effort, 220 Texas A&M students have been trained in agricultural advocacy to tell agriculture’s story by engaging in conversations about all sectors of agriculture. Read more.


How Will Supply Affect Beef Prices, Demand?

Beef industry, consumers to be affected by cattle production decreases in 2013.

Beef production in the United States is expected to decrease 4.8% in 2013, the second largest year-over-year decrease in 35 years, trailing only the 6.4% drop in 2004.
The reason is a combination of mostly steady carcass weights and a projected 5% or more decrease in cattle slaughter, said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.

“Many analysts expect the 2013 numbers to be followed by a 2014 decrease of 4.5% or more,” he said. “These two years would represent the largest percentage decrease since the late 1970s.”

Beef production in 2012 decreased by approximately 1.1% compared to 2011, with a 3.3% decrease in slaughter, which was partially offset by a 2.3% increase in carcass weights. Read more.


CAB Mythbusters

What they thought they knew that just ain’t true.

0113mk-steakAs a college graduate, I thought I had amassed a good portion of the knowledge I’d need for this job. (Maybe that was wishful thinking, given all the money I’d shelled out for that four-year experience.) The longer I’m in this position, the more often I think of this old adage: “The more we know, the more we realize how much we don’t know.”

That’s exactly the sense I get when we talk about how to get more cattle to qualify as Certified Angus Beef® (CAB®). As you may know, insufficient marbling is a factor in about 90% of the evaluated cattle that fall short of the brand. That could be a big handle to get hold of, yet I’ve had people roll their eyes when I bring it up, like they’ve heard it all before.

Myth: We’ve studied marbling for so long, there’s no point in researchers going over it again. Read more.


AngusSourceThe Source

Making do with what you have

During a family dinner over the holiday, my sister-in-law told me about a friend who had purchased a lamp made from an old funnel. She loves older items that have been given new life. She calls it repurposed; I call it making do with what you have, and it’s something farmers do all the time. It is funny, though, most farmers are not big fans of trying something new or changing a management practice so they can enroll in an age-verification program.

Do you enroll in AngusSource®? Do you know someone who would benefit from enrolling? Doing something different can be difficult. Read more.


Fewer Pounds, More Dollars

The value of beef exports remained slightly above 2011’s record levels despite continued lower volumes, U.S. pork exports for the first 11 months of 2012 continued to exceed the record-setting pace of 2011, and the value of lamb exports in November bounced back from an otherwise slow year, according to statistics released by USDA and compiled by the U.S. Meat Export Federation (USMEF).

With U.S. production declining in 2012, beef exports fell a modest 1% in value on a 13.3% drop in volume in November. For the year, volumes are down 11% (1,043,151 mt), but the value of those exports is $5.05 billion — still 2% above the record-setting value pace of 2011. Read more.


What a Chef Wants

Kris Ringwall
Chef Livio Ferigo

From the heart.

A great chef starts with the calling. His heart knows before his head what his hands enjoy.

Chef Livio Ferigo is a Bermuda legend 20 years after coming here from his native village in northern Italy. He grew up as helper and understudy to his mom in putting three meals a day on the family table. That was until 11 years of age, when he began training at the side of a hotel chef in Cortina d’Ampezzo.

“I always chose to work in an environment of very high standards, alongside respected head chefs,” he says. Going on to train at some of Italy’s most prestigious restaurants, it became more and more clear: “Being the best chef means your heart is in the work of your hands.” More recently, he published a cookbook inspired by those roots. Read more.


Angus Calendar

To view the Angus Calendar, a complete list of Angus sales, click here.




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