What is in this article?:
- Cow-calf producers should continue to prosper for at least the next few years, as beef exports boom and national herd numbers remain low.
- Current good prices for their cattle should remain in that lofty range for two years or even longer.
- Beef production is still an industry requiring tough decision-making. That is unlikely to change, no matter what the price per pound may be.
Beef production is still an industry requiring tough decision-making. That is unlikely to change, no matter what the price per pound may be.
Cow-calf producers should continue to prosper for at least the next few years, as beef exports boom and national herd numbers remain low.
That was the message from analysts at the National Cattlemen’s Beef Association recent annual meeting in Nashville, Tenn. Southerners, who produce many of the nation’s calves, had plenty to celebrate in Music City USA. They learned current good prices for their cattle should remain in that lofty range for two years or even longer.
“The cow-calf man is in the driver’s seat on this thing. The industry needs calves and that’s what we do,” says Dick Daugherty, Alcoa, Tenn., former Tennessee Cattlemen’s Association president.
Much talk in Nashville focused on rebuilding cattle numbers, which would take some pressure off cattle feeders. That will be difficult to accomplish quickly. Brisk demand supports continued good beef prices. That, plus drought conditions in crucial regions, encourages sending heifers to feedlots rather than retaining them for the cow herd. In order to keep feedyards full, cattle feeders will have to compete for calves.
Whether cow-calf producers elect to take profits now or build for the future, prices should remain profitable for quite some time.
USDA’s cattle inventory report issued just before the NCBA meeting began shows 90.8 million head on hand. That is 2 percent below Jan. 1, 2011 numbers, and the lowest national inventory since 1952.
The report estimates the 2011 calf crop at 35.3 million, down 1 percent from 2010, and the smallest since 1950. Plus, during 2011, U.S. beef cow numbers declined 3.1 percent to 29.9 million, much more than the industry expected, and the biggest drop since 1986.
It is the sixth consecutive year, and 12th year in the past 14, of decline for the U.S. beef cow herd. Since 1996, U.S. beef cow numbers have dropped 15.4 percent. USDA economists note, however, that during those 14 years when slaughter fell just 6.8 percent, national commercial beef production actually increased 3.1 percent, due, most likely, to greater efficiency on farms and ranches.
Many beef industry analysts still hope for a cow herd turnaround, and soon.
“The economic signals are in place for restocking to begin this year. All we need now is a little encouragement from Mother Nature,” says Randy Blach, CattleFax chief executive officer, who spoke in an Opryland Hotel ballroom filled with producers.
Even if Southwest drought conditions improve, though, Blach says he expects national cattle numbers to decline through 2013 before beginning an upward reversal in 2014. That means still higher cattle prices through 2012 and, quite likely, beyond.
Record prices do not necessarily equate to record profits, however. USDA Economic Research Service numbers show that total expenses for U.S. agriculture topped $300 billion for the first time in 2011, up 11.4 percent in just one year. Paying more for feed, fuel and other inputs keeps beef producers’ upbeat attitude from turning euphoric.
“It’s still somewhat difficult to make a profit. We have record prices but we have record expenses, too. On the feeder side, they have high cattle prices and high input prices, and they’re still working on margins. So, that’s a legitimate concern,” says Jim Bostic, West Virginia Cattlemen’s Association executive secretary.