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Canadian Cattlemen Jun 16, 2021

U.S. beef business and politics

Economics and politics in the States this spring has boiled down to bottlenecks, tax and spending bills and meat processing struggles.

Most of the grocery stores seem to be maintaining meat supplies, even as packers struggle to get close to rated capacity harvest. With currentness slipping in feedyards, the last thing the industry needed was a major plant down but the ransomware attack on JBS lopped a couple of days off a week’s work.

Not only has domestic beef demand stayed strong in the face of higher prices, exports are also booming, accounting for nearly a quarter of boxed beef shipments in some weeks. That’s in spite of refrigerated container shortages, port delays and shipping problems.

Many industries are struggling with supply problems, not just food.

Construction is one, and from the lumber standpoint, that industry is having problems similar to the beef industry. Timber owners are not getting good enough prices for logs plus the cost of logging and shipping but finished lumber prices have tripled. The lack of enough sawmills and workers are the bottlenecks. Some timber firms are taking payments to not cut trees for carbon tax credits rather than harvest timber too cheaply.

But the pressure on lumber prices and supply problems for homebuilders is creating an incentive for the U.S. and Canadian politicians to again discuss the tariffs on Canadian softwood lumber, perhaps helping that trade.

Feedyards are having to deal with grain price increases and supply disruptions. Rainfall has come in some areas of the West and the Cornbelt. While drought is still prevalent in many areas, rain has helped prevent things from getting any worse except in California and parts of the Northwest.

In Washington D.C., the Democrats, Republicans and White House, having spent nearly $2 trillion on the COVID-relief bill, are now fighting over another $2.9 trillion for “infrastructure.” Sensing that perhaps they can’t just run over the opposition for another gargantuan pile of cash, the White House signaled a willingness to cut some things out and not raise taxes as much as they want to pay for their extravagant want list. The Republicans have dug in, trying to limit the definition of infrastructure to roads, bridges, ports and airports. They are also opposing new taxes or rolling back the Trump tax cuts...


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