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Economist says southern feedlots face growing pressure as Mexico’s live cattle import ban persists

An ag economist says feedlots in the South will continue to feel the effects of the ongoing suspension of live cattle imports from Mexico. University of Tennessee’s Charley Martinez says the ban has been in place for more than a year and isn’t set to be lifted anytime soon.

“That probably is some type of signal where if you’re a feeder usually relying on Mexican cattle, you probably are really thinking, should we be in business or not,” he says. “And I think that’s one of the effects that we saw at the Lubbock when the Lubbock Feeders announced they’re in the process of closing.”

He tells Brownfield there is a decreased demand for feeder cattle. “That’s telling us that the market had more empty bunk space than what we needed,” he says. “So it’s trying to correct itself. But also at the same time, that’s an effect of not having those Mexican cattle coming in.”

Martinez says that southern feedyards could look to other sectors to meet supply needs. “We’re seeing this increasing domestic production of beef on dairy,” he says. “It’s gained a lot of traction from a supply chain standpoint where people have figured out how to feed them. They figured out how to make them perform. They figured out how to get an ideal carcass out of these animals. And so maybe that’s another quote unquote creative way to offset the supply that we usually would get out of Mexico.”

He says it could also alter the rebuild of the cattle herd. “We’re going to have a real tight run on supplies and prices are going to get elevated even more,” he says. “Does that price end up taking some people out of the business as well because of lack of margin or lack of profitability?”

Martinez says tight cattle supplies will continue to have ripple effects throughout the entire supply chain.