Consolidated Beef Producers launches the Beef Site to help regain competition in fed cattle market
June 9, 2014
Traditionally, Texas and other southern states have been the leader in the fed cattle market, but Bruce Cobb sees that market moving in a new direction: north. He pointed out that the most recent cattle on feed report revealed that Nebraska was the state feeding the most cattle.
As the fed cattle market grows and expands in the north, Cobb, general manager of Consolidated Beef Producers, believes it is crucial that feeders from Nebraska, Iowa, South Dakota and other northern states maintain the traditions of competition that have kept their cattle markets vibrant. CBP is a co-op of feeder members. The co-op staff works with each individual cattle feeder member to market their cattle competitively across the country.
"Competition is an important issue for the industry because buyer and seller create the market place. When you have both entities out there determining price together, that creates a healthy market place. When you take out that element of competition, which is a very critical part of a healthy market, you aren't going to have a strong market." Cobb said there has been a rapid adoption of committed supplies (captive supply or packer-controlled cattle) in Colorado, Texas and Kansas, that has not benefited the cattle owner. "It is important as the fed cattle market grows and expands in the north that they really consider the value of competition in their business model."
Beef producers, cattle feeders and marketers now have access to a new online tool to help them accomplish this, and provide a whole host of additional cattle and beef market data.
A new website, the Beef Site, http://www.thebeefread.com, pulls together data from all elements of the cattle market and translates it into useful, timely information for people all along the supply chain.
Cobb, and the rest of the CBP team is launching the website to provide the information so crucial in today's marketplace. The site will work hand-in-hand with Consolidated Beef Producers, utilizing their experience, knowledge and market analysis expertise.
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Through daily reports and updates, the website developers want cattle producers to understand how different today's market is, how it's behaving differently, and why. "Our main focus, our main objective is to awaken the marketplace," he said.
Along the way, there's always lots of activity in the marketplace that needs to be understood and clarified. "We want to defuse the rumor mill and not add to it. That goes back to honest, fair communication." Cobb goes on to say that they want to honestly address numerous market topics. "There are a lot of forces and drivers day to day and we want to help folks understand how each will affect the marketplace."
Cobb says that the cattle and beef industries are in a "very, very different market situation right now than our industry has seen. Period." He said there are three main reasons the market is not behaving as it usually does.
1. Velocity (speed) with which the market moves
2. Volatility – range from one day to next
3. Characterizing of the market (how violent it can be depending on your role in the market place)
Cobb calls it a very, very dynamic market.
There is one main reason that Cobb and his cohorts believe the finished cattle and beef markets will continue down this "different" road for quite some time: numbers, or lack thereof. "Cattle supply just continues to shrink," he said.
The marketing associates employed with the co-op have identified a need to reach out to the industry in this "different" time.
"This new venture we're going on is an extension of information and intel obtained from our involvement in the market.
Along the way there are three things the people at the Beef Site want to accomplish:
1. Provide fair and accurate data/information to every segment of the beef and cattle industries. "We want to help the industry from one end to the other: the cow/calf guy, the guy in the meat business, the importer, the meat broker and everyone between. We want to put what we believe to be the truth about the market out into the market," Cobb said.
2. Create a broader conversation in the industry about the value of competition. "When you look at cattle marketing methods, there has been an aggressive move toward committed supplies (captive supplies)," Cobb said. "Everyone has their own business model but there isn't enough value placed on competition in the industry. We're going to have conversations about that as well."
3. Provide a service to the fed cattle industry in the northern part of the country. "Because of the migration of the fed cattle business – more cattle are being fed in Nebraska, Iowa, and South Dakota than ever before – we are trying to expose ourselves to that fed cattle market – providing a service to that region of the marketplace because there is so much growth and change going on. We typically haven't had a presence up there." Cobb said northern states are not only growing their fed cattle numbers but also their packing capacity. "If you look at what's happening with the potential plant in Tama, Iowa, and with Tyson adding to their packing capacity, that is very much the growth area for fed cattle and beef business."
The management team, or marketing group, for CBP helps sell over one million head of cattle per year, Cobb said. This experience provides them with a rare look at the buttons being pushed to make the market move. "We're going to leverage that experience and use that to provide useful tools to the cattle industry through our website commentary."
Allan Sents, cattle feeder, joined Consolidated Beef Producers at its inception and believe they share a vision common to many of the Montana and South Dakota ranchers regarding the critical need for the competition in the free market economy. "Consolidated Beef staff has many years of experience in the meat industry, especially from the packer perspective. They have brought that experience to the cattle feeder in an effort to increase the cattle feeder's bargaining power with the beef packers." Sents believes, due to a disconnect between the cattle industry and its regulatory agencies designed to preserve competition, that small, independent cattle producers find themselves increasingly at the mercy of the meat packers. "Efforts like Consolidated Beef are one way and perhaps the only way, if we refuse to regulate, to keep some market leverage with the small producers."
The site information will lean strongly toward fed cattle and beef markets but Cobb said those details are useful for everyone up and down the supply chain.
Cobb said their site has value for cattlemen and marketers from all geographic areas. "Whether its South Dakota or California or South Carolina, the market as whole is an aggregate of all these things happening across the country in the cattle markets and beef markets. If you are feeding cattle in Nebraska or Texas, the market is the market. There are variances but we are all participate in the same macro market."
Cobb reiterates a crucial goal of their team, "It goes back to the very first thing that I talked about: to awaken the market, to help the industry understand what's going on, what's driving this market.
"If you continue to behave like you've always behaved, the market will not be successful for you because it's a very new and different market. It's not behaving normally. If the market's not behaving normally, why should market participants be behaving normally?" Cobb said. F