Feed Lot

APR-MAY 2017

Feedlots and cow/calf operations in the beef industry who feed 500 or more has annually on grains and concentrates; maintain 500 or more beef cows; backgrounder, stocker/grower, preconditioner; veterinarian, nutritionist, consultant

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Brazil is in the middle of an investigation with re- g ards to the "tainted meat scandal." Most importers of B razilian beef have suspended imports. China is the main importer of Brazilian beef and is encouraging Brazil to hand out harsh punishments to those in- volved. China does not appreciate their food supply being put at risk and tends to turn their back on sup- pliers for lengthy periods of time. This story is evolv- ing and it is suspected that the consequences will be long lasting and shift the import /export picture as we know it. This could be a game changer as the Brazil story comes at a time when ex- port demand is on the increase out of the US. China has been active in capturing supply from Australia. Chinas middle class is growing and when economies improve, there is usually an increase in demand of higher forms of protein. If you consider the earlier problems with bird flu and now tainted meat out of Brazil, the possible shifts in exports as the world at- t empts to secure safe meat products becomes com- p lex. Tight supplies in the US, Australia and Canada (the main exporters other than Brazil) causes a situa- tion where exports have to be shuffled to meet increas- ing demand. If China absorbs all of Australia's ex- portable beef then less is available for the US, Japan and South Korea. Stay tuned to this story as it plays out and possibly forces prices higher as exports are shifted from country to country. Producers focus current- ly seems to be the June through August timeframe. As this rally matures, producers will likely be given an opportunity to hedge cattle and feeder cattle at higher prices. However, markets are not likely to go up for- ever so latch on to those hedges on rallies as you can. Grain input costs seem to be cheap at the moment. The planting intentions report at the end of the month may have some surprises in it as producers shift acres 10 FEED•LOT  April/May 2017 Brazil could be a game changer MARKETING By LUKE scHWIEtErmaN Stay tuned to this story as it plays out and possibly forces prices higher as exports are shifted from country to country.

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