NCBA Overview: Great Time to be in Cattle Business

US - Last week Charlotte Johnston, TheCattleSite editor, attended the National Cattlemen's Beef Association (NCBA) Convention and Trade Show in Nashville, Tennessee. The record turnout at the event, with over 6,000 visitors and 250 exhibitors, epitomises the overall optimism and enthusiasm in the industry.
calendar icon 8 February 2012
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The record turnout at the event, with over 6,000 visitors and 250 exhibitors, epitomises the overall optimism and enthusiasm in the industry.

Support for the beef checkoff programme was at an all time high, as 75 per cent of producers believe the checkoff contributes to the profitability of their operations.

Cattle Numbers

With the lowest cattle inventory since 1952, and the highest cattle slaughter since 1996, there is talk that the US cattle inventory could pick up in 2012.

Drought and high prices pushed more cattle to slaughter last year, liquidating the national herd.

CattleFax estimates that a total of 2.2 million less cattle will be slaughtered in 2012.

Prices

Prices are expected to remain high for all classes of cattle in the US in 2012, as supplies remain tight. At the Cattlefax Outlook, Kevin Good said that retail beef prices would increase to new record levels.

With regards to profitability, cow-calf producers are likely to be in the driving seat in 2012, and as we move up the supply chain margins tighten, with packers continuing to struggle. If slaughter is down as predicted, contraction could be likely in the packer industry.

Trade

In 2011, total US beef exports boomed, increasing 20 per cent in volume, with a value of over $5 billion.

2012 exports are likely to increase more, but not by as much, said the US Meat and Export Federation.

Three new free trade agreements (FTAs) will help the export markets grow, particularly the South Korea deal. The current duty on US beef imports into South Korea is 40 per cent. With a 2.7 per cent decrease a year, in around 15 years time import duties on US beef will be eradicated in South Korea.

Demand for beef products is growing in South Korea, which increased US beef import volumes by 38 per cent in 2011.

CAFO Concerns

Cattlemen voiced their concerns over the Environmental Protection Agency's (EPA) proposed Clean Water Act (CWA) Section 308 CAFO (Concentrated Animal Feeding Operations) Reporting Rule.

The rule requires cattle operations to report a long list of information about their operations to EPA, including latitude and longitude (or street address) of the production area, acres available for land application of manure, type and number of head and contact information for the owner or authorised representative. This information would then be made available to the public via the EPA's website.

The NCBA believes that providing this information could put the nation’s food system at risk of increased terrorist attacks. EPA Administrator Lisa Jackson said that the agency understands the cattle industry’s biosecurity and privacy concerns. The final rule will be released on July 13, 2012.

Bankrupt Brokers

After MF Global declared themselves bankrupt last year, the CME Group announced a $100 million fund to protect farmers and ranchers who use CME.

The fund will not help former MF Global customers, who have not received all their money as a result of the bankruptcy. There is an estimated $1.2 billion shortfall in customer segregated accounts.

Under the new fund, farmers and ranchers will be eligible to receive up to $25,000 per account if they lose money resulting from the bankruptcy of a clearing member.

Leading the way in 2012

Nebraska cattleman J.D. Alexander will take of the presidency of the NCBA for 2012. Addressing the General Session, Mr Alexander said that 2012 will go down as the best year to be a cattleman.

Charlotte Johnston, Editor

Charlotte Johnston - Editor

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