To everything there is a cycle. Not the exact words of the parable, but in agriculture, cycles cannot be denied. Case in point – the size of the beef herd and value of beef cows today.
Back in the Southern Plains drought early this decade, several million cows were sold off due to lack of pasture. Then, rebuilding started and was going strong through 2017. However, the price of beef cows is falling to historic lows as herd expansion starts to plateau.
AUDIO: Profit Matters 5-22-18
Since the drought in the Southern Plains decimated many beef cow herds, and consequently reduced our national beef cow herd by several million, we have steadily seen the industry rebuilding over time, all the way through 2017. However, expansion in 2018 is beginning to look a lot different. Randy Blach of CattleFax explained recently the change of pace he has seen take place during the last several months.
?We?re basically moving back to a level where the expansion rate is flattening out,? Blach said. ?We?re still expanding but at a much slower rate than what we were a few years ago. Exactly what we should be doing.?
Blach says he expects the bulk of this herd expansion to be mostly wrapped up by the end of this decade. In the meantime, he says producers are having a hard time balancing things.
Prior to the expansion slowing down, cows were being retained – very few harvested. Blach now says the industry is beginning to see cow slaughter percentages increase. However, the market is failing to deliver producers adequate returns on their investment. Blach says the price of cows currently is at historically low levels.
?It?s hard to capture the full value of those animals because we?ve got a lot more cows that need to be harvested than we have space available,? Blach said. ?This is going to intensify over the next couple of years. Particularly when you are marketing cows at times when we?re in those peak runs. You?re going to see this cow market be pretty defensive here over time.?
*** Story Courtesy of Ron Hays, of the Radio Oklahoma Network
