Agricultural News
Peel Says U.S. Was At Critical Point with Shrinking National Cowherd
Tue, 17 Feb 2015 12:38:29 CST
The U.S. has seen a drastic decline in cattle numbers, but how far can the industry go? Most ranchers were forced to reduce their herd numbers in recent years due to the severe drought that drastically effected the Southern Great Plains and to a lesser extent the Midwest. This pushed nation cattle herd to the smallest numbers in more than 60 years. Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel said the numbers had gotten so small the U.S. was at a critical tipping point.
"I think so, I think we were forced to get smaller than we intended to," Peel said. "I think it probably did have some impacts on market share, if you will. Now I am not as worried about that as some folks. I think we will get market share back. Beef is very competitive on a value basis, if not on a price basis. I think we saw that this last year."
Radio Oklahoma Network Farm Director Ron Hays interviewed Peel at the recent Cattle Industry Convention in San Antonio, Texas. Click or tap on the LISTENBAR below to listen to this Beef Buzz feature.
In 2014, there were concerns how demand would play out in having record cattle prices. Peel said most of the concerns come from the fact that the industry had been to these levels before.
"The bottomline is, I think beef still has value to a strong consumer segment," Peel said. "As supplies rationed that out, those folks that really do value beef have stepped up and they are willing to pay whatever it takes. So, I think were in ok shape with that and I think we will recover market share as we rebuild supplies in this industry."
One of the reasons cattle prices were as strong as they were in 2014 was because of the strong demand from consumers domestically and internationally. Peel said every indication shows demand did strengthen in 2014.
"I think we probably undersold our demand strength to some extent in this industry," Peel said. "We probably need to give it a little more credit and be a little more assured as we go forward that the demand is there."
That's a good thing because with these high cattle prices, producers are investing a lot of dollars in expanding their beef cowherd and in retaining heifers. Peel said it's a lot of dollars and certainly there is absolutely more financial risk now. If you look at how many calves it takes to pay for a cow at today's prices, Peel said that ratio is not a lot of different than what they were when cow prices and calf prices were one-third of what they are today.
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