The CEO of CattleFax is confident the beef industry will see better market conditions down the road. Randy Blach, talking about the current state of market conditions, says the market has faced many headwinds over the last three or four years.
Blach; “If you step back and you think about what we were sharing last fall and early this year, the markets have largely performed very well with what we anticipated, but obviously we had a Russian invasion into Ukraine that stopped our rally early in the spring. We got most of that going here again in the fall, and again, we are selling our highest-priced cattle of the year this fall and will continue to see some push higher in here into the fall.”
As it relates to the drought situation, Blach said the most difficult thing is to see many producers being forced to cull their cow herds to such high levels at this stage of the cattle cycle. Blach; “We are finally in a position that cow-calf producers can get a payday, and they have to sell their herds. It is just devastating because we have gone through so many of these narrow margin years in here where we are just kind of getting by and make a few bucks, lose a few bucks, but now is a time for a payday and it is unfortunate they were not able to withstand the drought.”
Blach expects to see the cowherd get nearly as tight as it did in 2013 and 2014.
He says; “I didn’t think we would have to revisit these levels, but again, mother nature ruled the beast and that is why we did it then too, it was all mother nature. We don’t have much rain in the western corn belt regions, and you look at Nebraska, Kansas, Colorado, Oklahoma, Texas, we didn’t get much dryland crop. That all ended up being chopped, we are out of position and where we need the grain, we don’t have it.”
Freight is a massive issue, as well, whether we are looking at rail freight or truck freight. Though Blach says there are still a lot of good things about our economy, but there are a lot of problems when we look around the globe.
Blach; “We very well may end up in some sort of a recession when it is all said and done, but I don’t believe a recession is going to trump the higher price trends that we see unfolding here over the next two to three years. These are significantly smaller supplies that we are going to be dealing with in ’23 and ’24 and ’25.”