Given that feedyards have been unable to even get a sniff at a sustained profit the last several years, any hint of optimism is like a long, cold drink of water on a hot and dusty day. For 2009, the hint of a long, cool drink is there, but it comes with a caveat.
“There are so many outside influences that affect the commodity market these days, including the health of the U.S. economy,” says Warren Weibert with Decatur County Feed Yard at Oberlin, KS.
Assuming the American public hears something from Washington that calms them down and allows them to regain some confidence in the economic system, Weibert thinks the markets — both stock and commodities — will find a bottom and some stability. “Based upon that, we should see a bottom in the commodities markets and hopefully a resurgence in price.”
The recent drop in corn prices, as well as in the feeder-cattle market, gives the feeding industry more reason to be optimistic, he says, in terms of buying inputs and selling fed cattle at breakeven or for a profit in 2009.
“So there's reason for the feeding industry to be feeling better about the coming year, but it's been a tough go to get to this point and a lot of people have been squeezed in the process,” he says.
While consumers view the current economic situation with trepidation, they will continue to eat beef, Weibert believes.
“They might slow down eating it at the very high-end restaurants, but they'll keep eating it either at home or in the mid-priced restaurants, as well as the quick-service restaurants,” he says. “Therefore, the demand for beef looks like it's going to hold, so that's good from (the industry's) perspective.”