Cattle producers and industry members from the U.S., Canada and beyond gathered at NCBA 2012 to talk about the state of the industry, the triumphs and the challenges. As we look further ahead into 2012, the challenges for the margin operator don’t seem to get any easier. In fact, you could say that it looks like there’s going to be a lot more more risk for a lot less reward. One of the reasons for that rather grim forecast is the expectation of the growth of the North American cattle herd. There are projections that cattle for slaughter could decrease by roughly 2 million head, driving up the price and availability of cattle for the feeder and the packer. The rancher has a much higher probability of achieving profitability than the feeder or packer in 2012 based on the analysis of many insiders.
I spoke to Brian Perillat of CanFax about some of the potential challenges ahead for the margin operator, the current state of Canada/U.S. relations and some of the factors influencing the growth of the North American cattle herd. With heifers being held back the amount of calves available to feeders will get even tighter. Purchasing feeder cattle and managing risk is the definite play of the day.
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