Beef Buzz News
Derrell Peel Talks Downturn in Cattle Market and Continued Cow Herd Expansion
Tue, 26 Apr 2016 22:58:47 CDT
Cattle producers know it's been a rough few weeks in the marketplace. Fed cattle have dropped more than $6/cwt and feeders have been in decline as well. OSU Extension Livestock Marketing Specialist Derrell Peel says volatility in the futures market and a lack of direction in the cash market have made it difficult to know what's coming next.
"We've seen some seasonal kind of behavior in the first quarter of the year, and we're trying to figure out where we go from here," he says. "It's not so much that we don't know what direction we're probably going to go, but I don't think we have a sense of how committed we are to that path yet and how fast we go down that road."
Peel says the cow herd is on track for another increase as producers continue to rebuild following the drought, although he says it will be more moderate than last year.
"Given the momentum and where we started the year with heifer inventories, it looks to me like we will continue to see year-over-year increases in the beef cow herd," Peel says. "I'm looking for somewhere in the range of 1.5 to 2.5 percent year-over-year increase. That will translate roughly into 600,000 to 700,000 more beef cows."
Peel says that would put the total cow herd right around the 31 million mark, which is where the national cow herd was in 2011 at the beginning of the drought.
'We can call this a cyclical expansion, but it's really just a recuperation of the herd following drought liquidation," he says. "The real question becomes 'how much higher than that might we end up going in terms of a cyclical expansion?'
"That's very much a wait-and-see proposal until we see how both domestic and international demand develop over the next couple of years. That will ultimately dictate just how big we need to be in this industry."
Hear Dr. Peel's complete analysis during the latest Beef Buzz.
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