'We're going to wish we had those plants': Analyst sounds alarm on beef industry capacity

As cattle feeders celebrate another week of strong cash prices, market analyst Brad Kooima says the industry's longer-term concern isn't where cattle are trading today. He says it's whether the U.S. beef sector is quietly losing processing capacity it may need in the future. In the latest episode of Cattle Call, Kooima pointed to the recent announcement that a JBS beef plant in Pennsylvania will close later this summer, arguing the move reflects the strain packers face as the nation's cattle inventory remains near historic lows. The U.S. cattle herd is at its smallest level since 1951, while imports of Mexican feeder cattle remain restricted because of concerns surrounding New World screwworm. "We start with the smallest cow herd since 1951," Kooima said. "Then on top of that, you have the screwworm issue, which closed the border, restricting 1.2 to 1.3 million head per year of imports that we typically would have gotten. Add a shortage on top of a shortage." Kooima said the Pennsylvania closure may not have an immediate impact on cattle prices, but he worries the industry is overlooking the long-term consequences of losing harvest capacity during a cyclical downturn. "My concern is right now we don't have enough cattle to go around and we're not going to worry about it," he said. "But that'll change. When the industry is making this much money, we're bound to start to slowly expand here." The concern, he said, is that by the time cattle numbers recover, some of the infrastructure needed to process those animals may already be gone. "If we get down the road here a year and a half, two years, and now we've got one too many steers, we're going to wish we had Lexington, Nebraska, and we're going to wish we had Souderton, Pennsylvania," Kooima said. While much of the industry's recent focus has centered on New World screwworm and border policy, Kooima argued that maintaining processing capacity should remain part of the conversation. He warned that structural shifts within the cattle industry, including growth in formula marketing arrangements and beef-on-dairy production, could eventually alter the balance of power between packers and cattle feeders. "I worry that we're going to lose leverage because of beef on dairy." For now, strong beef demand and limited cattle supplies continue to support prices. But Kooima believes the industry's biggest challenge may be preparing for a future that looks very different from today's historically tight market. "The market's good today," he said. "But as a long-term thinker, I'm already starting to be concerned." #cattlecall #cattlemarket #cattle #beef #beefondairy #screwworm #podcast #bradkooima #agriculture #ranchlife #ranching