Market analyst discusses reasons for optimism in uncertain beef industry

Of course, she also acknowledged the significant impact of Donald Trump’s presidency, and how it has created a major unknown for Canadian exports, including beef. With no definite answers at this early stage, she says it’s crucial for those in the industry develop a solid plan moving forward.

“I think today there’s more of an emphasis on trying to manage that price risk and using the tools that are out there, whether it might be the futures market, it might be Western [Livestock] Price Insurance that AFSC (Agricultural Financial Services Corporation) offers, or forward contracting with other players in the industry, so there’s various different ways to try to mitigate some of that unknown risk out there.

“I don’t think you really can’t wing-it anymore, there’s too many unknowns to wing-it — unless you’ve got really deep pockets — so that’s one of the things I think that’s starting to become a much more common phrase in our industry today, is how do you manage that price risk?” Wasko added.

While discussing the market uncertainty, Wasko also pointed out that it has created a shift in how producers operate.

“We are getting more concentrated, if you will. There’s fewer feedlots, the feedlots that we have are larger, there’s fewer cow-calf operations, they’re larger. So economies of scale obviously, as margins have been shrinking over the last many years, the industry really has had to look at consolidation more than diversification.”

As producers focus more on specialization, she noted that it’s created a greater level of cooperation for the entire industry. She says cattle feeders are working with packers and cow-calf producers are communicating with feedlots, as they push towards a common goal.

by Patrick Burles - @PatrickBurles on Twitter

Market analyst discusses reasons for optimism in uncertain beef industry

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