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Processing problems continue to impact the fed cattle market

A livestock economist says reports of packers not participating in some recent fed cattle auctions is part of a nationwide, industry-level issue. Dr. Derrell Peel with Oklahoma State University says, “The bottom line is right now, we’ve got more fed cattle being produced collectively in all of the feedlots than we have capacity in this industry to process.”

Peel tells Brownfield beef processors are getting backed up right now, and carcass weights are going up.  He says the U.S. cattle industry has had excess processing capacity for years, but the recent expansion in the cattle herd combined with cattle held longer because of the pandemic has put pressure on the processing sector for the first time in more than three decades.

Peel says the current disconnect is keeping fed cattle prices down. “We may struggle to get ourselves cleaned up and maybe see some of that optimism as early as the third quarter. It might take more towards the fourth quarter and towards the end of the year before we really get to that point.”

Peel says consumer demand for beef remains strong but adding supply to the market is hard because of packing capacity constraints including labor.

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