Source: Rita Jane Gabbett, MEATINGPLACE, 1/16/12

 

The “war of attrition” on feedlots and beef packing plants will continue and accelerate in 2012, according to Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel.

“Feedlots and packing plants will compete aggressively for ever declining animal numbers and contribute to even higher input costs until somebody finally exits,” says Peel in the university’s latest “Cow/Calf Corner” newsletter. “It may not happen in 2012 but the pressure will be even greater and it will eventually happen.”

He points out that most of the existing feedlot and packing infrastructure was originally built in the 1970s and 1980s, a time when cattle inventories were 15 million to 25 million head greater than today.

“Continued herd liquidation, especially since the mid 1990s has accelerated the pressure to reduce feedlot and packing capacity. Downward adjustments in industry capacity are a slow process and not much has changed yet. The drought in 2011 temporarily accelerated cattle marketings and postponed the coming crunch of tight feeder supplies but ensures that the crunch will be even more severe when it happens,” Peel predicts.

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