By SANDRA HANSEN, Ag Editor

BANNER COUNTY - Driving down a snowpacked rural Nebraska road keeps a driver’s hands tightly gripping the steering wheel, and his mind on the hazards ahead. He probably isn’t thinking about the price of beef in China, or the number of chickens that are influencing that price.

A hard look at those and other issues affecting the U.S. livestock industry was served by James Robb, director of the Livestock Marketing Information Center in Denver, Colo., along with a good steak meal by the host Darnall family during their appreciation lunch and educational meeting at the Darnall Feedlot recently. Robb presented his latest analysis of the world’s beef marketing situation to about 120 people attending the annual Integrated Resources Management (IRM) Pen update.

The IRM project, sponsored by the University of Nebraska, is designed to help producers better manage their resources for increased profitability. This feedlot segment of the program, introduces cattle owners to the workings of a feedlot, including placing one or more head in the lot, and deciding on whether to retain ownership or not. Data collected on the animals during their time in the feedlot is the property of the owner who can use it for whatever purpose he/she wants. This information can prove especially helpful in today’s marketing environment.

According to Robb’s "Market Drivers & Outlook," the domestic beef industry is undergoing major changes, due to several factors such as corn prices, global imports and exports, and natural disasters. He went into details of the market outlook and trends in cattle numbers, as well as providing some advice on managing in these strange times.

Basically, the world situation is based on two sides of the market - supply and demand. The supplies are shrinking and the demands are growing. Higher prices are good for the producers but harder on feeders and consumers. How far any of these levels can go is still a mystery in today’s global economic upheaval.

Consumers will drive how much higher prices will go, Robb said. Demand will directly track the shrinking U.S. economy, and its anemic recovery.

One item of interest in Robb’s opinion is the continued demand for red meat in this current economic situation. "Consumers stuck to red meat in their diet, versus white meat, this time," he said. In past similar situations, they have switched to chicken, but this time the cost of chicken remains high, which is good for beef, he noted.

Robb also discussed the importance of beef export values. He said it isn’t only red meat that contributes to the economics of the industry. Also of consideration are the value of items such as tallow, hides, and variety meats. In some years, the value of live cattle exports is next to nothing. Beef and veal are among the best export values, he said.

Contrary to popular belief, Robb said the value of the U.S. dollar has little to do with prices. Instead it is the growing middle class in other countries such as China and India that are the driver. "It is the growing economies of those countries that have expanded by a factor of 10 in some cases," he said. "China is bidding beef away from U.S. consumers."

Another issue at this time is the cost of corn, a mainstay in feeding U.S. beef herds. According to Robb, if the next USDA report shows plantings above 94.5 million acres, the price of corn will drop to the $4.50 range. If it’s lower, it will hang in there around $6. "Nobody knows for sure," he said.

With all of this uncertainty, it is certain that "the corn market is absolutely a key factor in whether the feeder makes money," Robb said.

As for the farmer, "If you’re thinking about (planting) corn, you’re thinking in the right direction," Robb said.

But the corn factor only works if Mother Nature cooperates. Robb said the ongoing droughts in the United States and Mexico are game changers.

With all of these outside influences, Robb said the U.S. cattle market has changed. "If you think cattle is still a cyclical industry, you’re missing the boat," he said. "Chicken has more impact on the market."

As for coming out of the historically low inventory numbers, Robb said the decline will continue into 2013. In 2012, it would take 150,000 head just to stabilize the U.S. herd, he said. It can’t be built up any quicker than the reproduction cycle.

For more information go to www.lmic.info