Senior Farm and Ranch Broadcaster, Ron Hays, is back talking with Oklahoma State University Extension Livestock Marketing Specialist Dr. Derrell Peel about cow number projections.
Beef cow herd numbers declined through 2023, Peel said, and will be smaller as of January 1, 2024.
“When you look at the slaughter numbers and work through the math, there is no way that we could have avoided getting smaller,” Peel said.
Looking ahead, Peel said there is a possibility that 2024 may see the lowest cow herd numbers yet.
“It is not clear yet, particularly with the amount of drought and poor conditions we have around, what will happen in 2024,” Peel said. “We will be watching this going forward, but I am pretty sure we will be smaller going into 2024.”
Recently, Peel said many producers have been embracing tools such as Livestock Risk Protection.
“We have got higher prices, and we are very bullish over the next couple of years for prices in general, but there is also a lot of risk in this market, and certainly lots of potential for outside shocks that could come in and impact our market, so producers are very wise to consider using tools like LRP…,” Peel said.
While the topside of the market seems to be wide open, Peel said, it would be smart for producers to lock in their bottom side in the case of a black swan event.
“If you look at a map of the prices, where we are now, it looks a lot like the left side of that price peak we had in 2014 and 2015,” Peel said. “That one was basically a two-year event. We had two years of high prices, and a lot of producers, if they had some hesitation about jumping into herd rebuilding now, it is because that was pretty short-lived.”
While the general setup is similar to 2014 and 2015, Peel said today has some very important differences compared to those years that will make this a much longer-lived event.
“It is going to take longer to get started rebuilding, it is going to take longer to accomplish the rebuilding, and as a result, we are going to be on a higher plane of prices,” Peel said. “We are projecting formally that we will have higher average prices through 2024 and 2025 at this point at a minimum, and we have to wait and see beyond that.”
Costs also continue to be high, Peel said, which is another challenge for producers. Peel said he does not believe the markets have reached enough height to provide producers with enough profit potential to respond accordingly.
As beef supplies are projected to tighten more and more, Peel said there will not be a loss of beef demand, but instead, it will become less available to some consumers due to price.
“We are going to see a substantial decrease in beef production not only in 2023, but in ’24 and ’25 at a minimum, so as we get into tighter and tighter supplies, the market will ration it so that some people will decide not to eat beef,” Peel said.
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