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Cow Herd Decline Will Continue Into 2013, Rabobank Analyst Predicts

The beef cattle industry continues to weather the drought throughout the central United States by reducing herd size. Continuing drought, high feed prices, and the lack of forage are contributing factors hampering opportunities to rebuild the nation's mama cow herd.


Radio Oklahoma Network Farm Director Ron Hays spoke recently with Don Close, a veteran cattle market watcher and Vice President of Rabobank's Food and Agricultural Research Advisory Group. He says, without a doubt, the drought has hit the industry hard, but the decline may be slowing.


"It set us back, easily, a year if not two years. The one thing that I think we will be, hopefully, pleased to find that when we get the cattle inventory report in January, if you look at the rate of beef cow slaughter that we have had the second half of '12, that's never developed at the pace that so many people anticipated that it would. Are we going to see another year of net decline in female numbers? Unquestionably, we will. But, will it be as severe as we were fearing during July and August? Probably not."


Even with the reduced size of the cow herd, Close says it is important to acknowledge that we are still looking at record beef production. But, he says there are two distinct schools of thought when it comes to looking toward the future.


"Bottom line, we don't need to rebuild numbers back to the levels we had years ago," is the position of one group of analysts, he says.


On the other hand, there is a group of analysts who see grasslands in Texas taken out of production for recreational purposes and rangeland in other states, like Oklahoma, being put to other uses to the detriment of future beef production. They say, "If we're going to bring those numbers back, we're got to displace a lot of that hunting lease land and, certainly, a way more politically-sensitive topic, but it applies there in Oklahoma with the number of horse programs that are out there taking up cow ground."


Close says another factor that may hamper herd rebuilding is the undervaluing of grassland across the Central Plains where more and more acres have been put into row crops.


"My personal perspective is there will come a day when we think we've probably overdone it and taken out way more of this grass than what we should."


With all those challenges, is it possible to turn a profit in the beef business in 2013?


"I think as far as prices for fed cattle will undoubtedly be an all-time record year. At the same time the biggest issue that cattle feeders and producers are going to face daily is trying to contain their input costs and trying to preserve a margin," Close says.


With margins narrowing, Close foresees profits to be had, but with a contraction in the beef industry's number of producers. He says the winnowing process will go on, favoring the largest producers with the most efficient management.


The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network- but is also 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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