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High Hopes

Written by Dennis Sun

As I have said before, those in the business of raising and feeding beef are true optimists. But, if you own or lease a ranch or feedlot, do you have a lot of choice? I would guess most beef producers or feeders would tell you, “Some days are better than others.”

The latest issue of BEEF Magazine has this year’s Producer Optimism Index out, and if it is any indication, the outlook is good.

Scott Grau, Penton director of research, said, “I see that producers are showing increased optimism, both in the short-term and long-term, due to their perception of the supply and demand fundamentals, domestically and internationally. This is supported with producers’ view that the international beef trade influences the prices they receive in the U.S., so they are competing in a worldwide market-place.”

He goes on to say, “To better compete in this market, a vast majority of respondents are making market management decisions to decrease their input costs. The most common method is to get more gain per acre of pasture.”

Also, other issues that helped influence the optimism were the drought fading away in the West and a new U.S. president.

Producers maintain similar attitudes relative to short-term and long-term optimism. In the short-term category, seedstock producers led the way as most optimistic, followed by feeders, then stocker-backgrounders. Last was the cow/calf producer, and the top category was international demand. I suppose that China accepting American beef created much of the optimism for global demand.

On the negative side, input costs were the top reason for being less optimistic, while consumer demand was high for either being optimistic or less optimistic.

Over the longer term, international demand was the top reason for being optimistic and input costs again were the reason for less optimism. The top reasons for management and procurement strategies were more intensive pasture management to increase stocking rate and grazing more and feeding less. That looks like those reasons came from smaller cattle herds, not on Wyoming ranges.

International beef trade was selected as essential to good U.S. cattle prices. We hope our president hears that as he gets into new trade agreements.

I was surprised to see that around 55 percent of those surveyed used no risk management tools, such as forward contracting of calves, futures, livestock risk protection or forward contracting of inputs. If those people surveyed were mainly smaller producers from east of the Mississippi River, I can understand it.

Forty-three percent said they were going to keep their herd size the same, while 29 percent of producers noted that they were planning to expand by between one and 10 percent.

The news of international demand for beef and, lately, the rising price of slaughter cows and bulls have kept the market stronger that we thought it was going to be. We say a prayer for those in North and South Dakota who are forced to sell pairs due to the drought conditions. It is surprising here in Wyoming to still see some dry spots around, even with all the moisture we had earlier.

As we have always done, we will continue taking advantage of the good days and toughing it out during the days that are not so good.