Welcome to the Friday edition of the HOT BARN REPORT
Heard ONLY on American radio stations across the nation and online at hotbarnreport.com!
Karina Jones, Field Director for R-Calf USA joins us each Friday from her ranch in the heart of Nebraska covering new and important cattle industry news and policy.
Concentration killed the cat, I mean the cattle market. Welcome to this special Friday edition of Hot Barn Report.
2023 will be a new frontier for the cattle industry. Those who have rested on the sage ole wisdom that the market has cycles will probably watch that theory fall off the wall like Humpty Dumpty.
Thebeefread.com made some interesting analysis, “To start 2023, USDA choice boxed beef prices are $14/cwt higher than a year ago meaning they are record high for the first week of any January in history. Not bad. But, fed cattle prices are about $12 cheaper than the all-time high for early January set in 2015.” Is anyone else seeing the disconnect between the wholesale beef market and the live cattle market?
We are looking into the crystal ball at a bull market but is it a big enough bull to fight off inflation, globalization and the power of concentration? Had it not been for the drought and Mother Nature dealing a major blow to the heart of cattle country, this year would not be spun up to be such a major mover. The shrinking fed cattle and feeder cattle supplies will make life difficult for packers and feeders, both battling with capacity utilization and profits. Packers will fight trying to lose as little as possible while feeders will be in for the fight of their lives to cover high priced feeder costs, cost of gains and lost operational efficiency.
“So, it may seem like the market is starting 2023 at ‘high prices’, but much higher prices are coming. Higher prices are on tap for consumers, grocers, food service too. It is highly probable, given the proven record beef demand for the last two years, that wholesale boxed beef values will spend more time near $300/cwt in the next 24 months than $250/cwt,” according to thebeefread.
But as I talked about last week imports are climbing the ladder of the US red meat disappearance. When we only 4 major packers and two of them are foreign owned their loyalty is not to the American cattle industry, but instead to their own P&L statement. Since packers have about 80% of their cattle needs committed, they only have to worry about topping off slaughter schedules. Will that force them to get aggressive in the cash market or are they scheduling more boats to bring it up from Brazil? Even the USDA is predicting 2023 to see an increase trend in more red meat disappearance coming from imports.
This all comes as no surprise to those are have been paying attention. We are going to need more than the markets to be bullish in 2023. We are going to need this country to take concentration by the horns to return equity and profitability to rural America!
These Diamond Dozen Hot Barns are ready to serve your cattle marketing needs in 2023: Stockmens Livestock, Lemmon Livestock, North Platte Stockyards, St. Onge/Newell, Platte Livestock Market, Tri County Stockyards, Torrington Livestock, Creighton Livestock Market, Bassett Livestock Auction, Mobridge Livestock, Ogallala Livestock Auction Market, and Presho Livestock. Catch them all on CattleUSA.com.
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