Market Conditions Conducive to Beef Herd Expansion in 2014, Derrell Peel SaysThu, 16 Jan 2014 11:47:47 CST
The U.S. cattle industry will be paying close attention to the January 31st Cattle Inventory report which, among other things, will detail the size of the nation’s beef cow herd. Oklahoma State University Extension Livestock Market Economist Derrell Peel says herd expansion has begun, but the unanswered question is what size is the herd currently and what will it be next year.
“Herd expansion really started in the last part of 2013. I think heifer retention started in the second half of the year. The report, I expect, to confirm that. So, we’re looking for beef breeding heifers to be up in excess of three percent as of January 1. Cow slaughter was down significantly in the second half of 2013. And, so, those things said, I think the beef cow herd got a little smaller in 2013 and it will be smaller as of January 1, 2014, but I think behind the scenes we’ve already started the ball rolling toward herd expansion. And so the real question going forward is just forage conditions as we move into the spring period. If we can continue to moderate those drought conditions in that March, April, May period in terms of both pasture and hay production, then I think herd expansion will move forward. We could potentially see a one- to two-percent in the beef cow herd in 2014 under favorable conditions.”
Peel says he sees high cow prices ahead for the next couple of years due to the low supply of cattle in the U.S. He says it took several years for this deficit to develop and the market is now sending signals via higher prices for herd expansion to take place.
Adequate rainfall in forage producing areas will be the driver of the pace of expansion, Peel says. Continuing drought conditions in the western half of the southern Great Plains mean those areas will be slower to recover in terms of herd numbers. He says it will be a couple of years-even with ample rains-before those areas will experience a solid recovery.
Peel says as far as producers are concerned, the current market conditions should help them focus on doing what they do best.
“For most of the cow-calf and stocker producers, the bottom line is markets are probably not your biggest concern. Market prices are going to be strong in general. That’s not to say we won’t have any volatility, but in general if you have something to sell, it will sell pretty well. So, produce something. Manage production. Manage the cost of production as best you can so those high prices really do translate into increase profit opportunities. And I really think that’s where you put your focus. I don’t think you have to worry as much about market prices as you do about keeping a calf alive in this kind of environment.”
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