Jim Robb Sees Profitability Returning to Cow-Calf Sector as Industry Enters into Transitional PeriodWed, 27 Jun 2018 10:17:43 CDT
According to Jim Robb of the Livestock Marketing Information Center out of Denver, the beef cattle markets are seeing a rise in the number of heifers moving into the beef production system rather than the breeding herd side. At the same time, beef cow slaughter is up dramatically year-over-year. He told Radio Oklahoma Ag Network Farm Director Ron Hays in a recent interview, that this activity in 2018 suggests the industry has arrived at a time of transition in the marketplace and expects profitability over the near horizon.
“We’re certainly moderating the rate of growth rather significantly compared to recent years and at this pace, when we get to January 1, 2019 - we will probably have well less than one percent growth in the nation’s beef cow herd,” Robb explained. “That’s very close to population growth. So, we’re looking at 2019 and 2020 probably for higher prices on calves and yearlings. And, that takes some planning now.”
Robb emphasizes that rancher really need to be making some critical management decisions now, with a very limited window in which to do it, in order to take advantage of the favorable conditions developing in the markets. As the markets churn through the cyclical lows currently anchoring markets, Robb says it will be important for ranchers to have their strategies in place as prices begin to turn higher. Barring any unforeseen circumstances, he believes a producer with the right game plan will stand to increase his bottom line in the years ahead. He cites the size of the US corn crop and the rate of heifer slaughter as key indicators that producers can look to in order to gauge the market.
“If the corn crop doesn’t get real small or something hit us alongside the head, we think calf prices in 2019 will start clearly moving higher year over year,” he said. “We’re at about breakeven now. But, I think profitability will improve in 2019 for the cow/calf sector and then we get to 2020 and we’re probably looking at higher prices. We had a pleasant surprise in 2017 in terms of better profits than anticipated and I think we’ll be back to those levels in the next couple years.”
Listen to Robb discuss his predictions for the next couple years regarding profitability in the cow/calf sector with Hays, on today’s Beef Buzz.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today's show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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