Oklahoma Farm Report masthead graphic with wheat on the left and cattle on the right.
Howdy Neighbors!
Ron Hays, Director of Farm and Ranch Programming, Radio Oklahoma Ag Network  |  2401 Exchange Ave, Suite F, Oklahoma City, Ok 73108  |  (405) 601-9211

advertisements
   
   
   
   
   
   

Agricultural News


Cattle Prices: How High is High?

Mon, 17 Jan 2011 16:04:15 CST

Cattle Prices: How High is High? Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel offers this latest analysis of where the cattle market stands here in the southern Great Plains.



"Feeder and fed cattle prices are at or near all time highs and are poised to keep moving higher. Both Feeder and Live cattle futures suggest that higher prices are yet to come. In several recent meetings and conversations with producers, I am seeing a couple of reactions to the current situation. There seems to be an overall feeling of disbelief or a sense that there is another shoe to fall. The basic question seems to be one of "Is this for real?". Given everything we have been through in recent years and the amount of volatility in most input and output markets, such hesitancy is understandable. It is easy to remember corn and wheat markets in 2008 which soared to astronomical heights for a brief period of time. Are cattle markets in the same situation: set for a wild but short-lived ride into the stratosphere?


"The real answer is, of course, is that no one can be sure how this will play out. We have never been in a situation like this before. However, when the factors that put us in this situation are considered, there is good reason to believe this is not a flash in the pan that will fizzle quickly. Unlike grain markets in 2008, cattle markets are not reacting merely to the short run impacts of market shocks. There are numerous factors at work, most of which are longer run in nature and will persist for the foreseeable future. Although the phrase "perfect storm" is overused, it may apply to the 2011 cattle market situation.


"The underlying supply situation that is the major driving factor has been developing since the early 2000s, when roving droughts across the U.S. extended the last major cyclical herd liquidation. The BSE shocks in 2003 pushed the industry to new levels of intensity with tight feeder supplies offset by placing ever younger and lighter cattle into feedlots. This reaction worked well as long as corn was cheap. By 2004, prices had reached a level that resulted in limited herd expansion in 2004 and 2005. In 2006, the world changed with grain prices jumping to new levels which have continued fundamentally higher and provoke long term beef industry adjustments that continue to this day. The loss of profitability due to high and volatile input prices since late 2006 also prompted additional liquidation which led to the extremely tight numbers we see today.


"The point is that there are some very solid reasons why we are seeing record cattle prices and still have expectations for even higher prices. Limited cattle numbers, high grain prices that temper carcass weights, and the need to reduce heifer and cow slaughter all suggest that supplies will tighten significantly in 2011 compared to recent years. A continuation of strong export demand and indications of recovery in domestic beef demand will allow cattle and beef prices to move higher. Just how high? No one knows-the key is demand and just how much higher prices can be supported. As is typical, the market will probably overshoot at some point and pull back a bit to reveal what the top really is. It does not appear we are close to that level yet and even when we do, we will likely stay at historically high levels for some time. The situation that led us to this point has been a decade in the making and will not unravel very quickly."



   


 

WebReadyTM Powered by WireReady® NSI

 


Top Agricultural News

  • Younger Cows are Starting to Come to Town, Says Bob Rodenberger  Fri, 30 Sep 2022 10:46:55 CDT
  • BASF's First Bale of Cotton Helps Raise Money for Scholarship  Fri, 30 Sep 2022 10:12:04 CDT
  • Korean Grain Importers to View U.S. Corn Crop Firsthand Across Four States Ahead of Export Exchange 2022  Fri, 30 Sep 2022 09:40:41 CDT
  • Oklahoma Congressional Delegation Honored with Friend of Farm Bureau Awards   Fri, 30 Sep 2022 09:37:41 CDT
  • Fire Weather inputs will become Stronger with elevated Fire Weather moving into the mix through the Weekend  Fri, 30 Sep 2022 09:25:12 CDT
  • Federal Disaster Programs Available to Aid Producers in Forage Loss and Transportation   Fri, 30 Sep 2022 08:53:13 CDT
  • Dr. Kim Anderson Talks Factors Impacting Commodity Markets This Week  Fri, 30 Sep 2022 08:46:47 CDT
  • Legislature allocates $250 million from PREP fund to fuel economic development throughout rural Oklahoma   Fri, 30 Sep 2022 08:44:33 CDT

  • More Headlines...

       

    Ron salutes our daily email sponsors!

    Oklahoma Beef council Oklahoma Ag Credit Oklahoma Farm Bureau National Livestock Credit Ag Mediation Program P&K Equipment Oklahoma City Farm Show Union Mutual Stillwater Milling Oklahoma Cattlemen's Association KIS FUTURES, INC.
       

       

    Search OklahomaFarmReport.com

    © 2008-2022 Oklahoma Farm Report
    Email Ron   |   Newsletter Signup   |    Current Spots   |    Program Links

    WebReady powered by WireReady® Inc.