The cattle industry may have a profit opportunity in the cow/calf sector in the near future. The Livestock Marketing Information Center (LMIC) says heifers are still going to market as fed beef. The projection is the cattle herd may grow only one-percent next year, keeping supply low enough to be profitable, especially in the cow/calf sector.
AUDIO: Profit Matters 6-28-18
Jim Robb, of the Livestock Marketing Information Center, says beef cattle markets are seeing a rise in the number of heifers moving into the beef production system rather than the breeding herd side. At the same time, beef cow slaughter is up dramatically year-over-year. Robb told Radio Oklahoma Ag Network farm director Ron Hays in a recent interview that this activity suggests the industry has arrived at a time of transition in the marketplace and expects profitability over the near horizon.
“We’re certainly moderating the rate of growth rather significantly compared to recent years and at this pace, when we get to January 1, 2019, we will probably have well less than one-percent growth in the nation’s beef cow herd,” Robb said. “That’s very close to population growth. So we’re probably looking at 2019 and 2020 for higher prices on calves and yearlings. And that takes some planning now.”
Robb emphasizes that ranchers need to be making critical management decisions now, in order to take advantage of the favorable conditions developing in the markets. As the markets churn through the cyclical lows currently anchoring markets, he says it will be important for ranchers to have their strategies in place as prices begin to turn higher. Barring unforeseen circumstances, Robb believes a producer with the right game plan will stand to increase his bottom line in the years ahead. He cites the size of the U.S. corn crop and the rate of heifer slaughter as key indicators that producers can look to in an effort to gauge the market.
“If the corn crop doesn’t get small or something hit us alongside the head, we think calf prices in 2019 will start moving higher year-over-year,” Robb said. “We’re at about break even now. But, I think profitability will improve in 2019 for the cow/calf sector and then we get to 2020 and we’re probably looking at higher prices. We had a pleasant surprise in 2017 in terms of better profits than anticipated and I think we’ll be back to those levels in the next couple years.”