US – The current phase of US beef herd expansion is not expected to last as long as the last rebuild period in 1990-1995.
Diminishing ranch returns, both on finished cattle and calves could thwart a “fast start” to US beef herd expansion, a leading agricultural economist has suggested.
Less “profit stimulus” compared to the past twelve months “will likely slow” growth, which has seen a 2.5 per cent lift in the beef cow inventory, according to Professor Chris Hurt, University of Illinois.
The figures come from a USDA producer survey highlighting the recovery that has taken place since the second half of 2014.
Higher beef supplies and a recovery from pork and poultry sectors mean beef prices in this cycle have already passed, added Professor Hurt.
This could mean a shorter multi-year expansion period than 20 years ago.
“Peak monthly prices may have occurred in November 2014 when finished cattle prices averaged $170 per hundredweight and 500-550 pound Oklahoma City steer calves average $303,” he said.
“Finished cattle prices dropped below year-earlier prices in late-June and continued to drop to $145 by the end of July.”
He said the usual spring pattern of lower prices has been greater this year. Finished prices dropped to below year-ago levels in and reached $145 by the end of July.
However, Professor Hurt noted good pasture conditions and a “feeling” that feed prices were to remain moderate. USDA statistics show a seven per cent lift in heifer retention this year compared to last.
US government outlooks have reported adequate rainfall across much of the US. This has set up summer grazing plans, in some cases into the fall, replenishing soils and eliminating drought across widespread areas, barring large regions west of the Rocky Mountains.
He said the “rapid” early expansion had nearly matched that of the 1990-1995 phase which saw the proportion of beef heifers retained as a percentage of the cow herd peak at over 16 per cent, the current level already achieved this year.
He added: “While expansion on the new cattle production cycle has launched out of the gate, the question of how long it will persist will be determined over the next two to four years.”
But this start should not be a surprise, he explained. The Southern Plains cow herd dropped 21 per cent between 2007 and 2014 as national numbers contracted 12 per cent.
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