Senior Farm and Ranch Broadcaster Ron Hays talked to OSU Extension Livestock Market Economist Dr. Derrell Peel after the latest USDA Cattle-on-Feed Report was released last week. In Friday’s BeefBuzz, Dr. Peel analyzed the numbers. Today, he is discussing rebuilding the nation’s cowherd.
Dr. Peel explained that his basic outlook hasn’t changed in about two years, a period which he described as the longest in his career that something hasn’t come up to change things. “The only thing we’ve done is we’ve extended it farther because it is really this heifer retention question. We’ve been slow to start. We may be starting now, and that may lead to some different things to say at some point, but really it has been the same message for a long time, with the exception, of course, that we are in a much more volatile external environment that the cattle market is working in right now.”
Politics, trade debates, and macroeconomic aspects are the contributing factors to the volatility of the environment; however, they haven’t changed the overall outlook.
The U.S. cowherd experienced such constriction initially because prices of cattle have been too high to pass up, especially considering the recent prevalence of drought conditions. Producers sold their heifers, reduced the stress on their land, paid off their bills, and some are now looking to begin rebuilding their herds; however, progress will be slow.
“Even if we do start, I don’t know that we are going to see a really aggressive, rapid push here,” Dr. Peel said. “I think it will be a little more moderated kind of pace of herd rebuilding that will take several years to fully develop.”
He explained further that producers and their lenders are being understandably prudent and very cautious about rebuilding, considering the astronomical prices of cattle right now. “Some producers are in better shape to be the ones to go out and make this expansion happen; other producers maybe still need a little time to get themselves in better shape financially, so prudently, might be the ones who hold back a little bit,” he said.
According to the Monthly Retail Price Report, beef prices continue to increase at record levels. When comparing beef prices to those of other proteins, beef is much higher, further exemplifying the value consumers are placing on beef when they don’t move to less expensive alternatives like pork or chicken.
While Dr. Peel doesn’t think consumers will turn away from beef entirely, he expects two things to happen over the next few months: if heifer retention begins, beef production will fall, and consumers will make some adjustments to the mix of protein products they are consuming in favor of a less expensive product.
“I don’t think we’ll see a mass abandonment of beef under, virtually, any circumstance,” Dr. Peel stated. “We will probably see more impacts as we go further and squeeze supplies and push these prices even higher.”
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
