Derrell Peel, Oklahoma State University Extension economist, brought his insights into the current cattle market economic situation to Cattle U.
Cattlemen have seen a herd expansion for about 5 years now, Peel told attendees, but inventory seems to be plateauing according to the July 1 U.S. Department of Agriculture’s Cattle Inventory Report. Mostly the 2 million head of beef cows added to the U.S. herd replaced those that were culled from drought in 2011, 2013 and 2014, he said.
“We had a slightly bigger calf crop last year, and that’s going to translate into a bigger or as big feeder supply,” he said. But he expects a slowing growth in beef production in the next 15 to 18 months.
What’s unique is that demand for beef is matching the growth in cattle numbers, Peel said. That stable demand is mostly responsible for the plateau in cattle numbers because there’s not a sharp price pressure that would otherwise force liquidation.
But, even though the beef industry is fairly stable now, it currently faces one of the most turbulent external environments he’s seen in his lifetime, he said.
“There’s a lot of uncertainty in the feeds situation, and we may have a smaller corn crop than we thought,” he said. “We just don’t know how much smaller. It’s been a strange year weather-wise and it’s going to be challenging to find hay in some places in the quality and quantity that we need.” This may also push some in the Southern Great Plains to replace corn with feed wheat in their rations, but to what extent remains to be seen, he warned cattlemen.
The demand for beef is closely tied to the health of the consumer economy and Peel said the macroeconomy has been strong, but there’s warning signs in some sectors that that could be slowing.
And, of course export markets for U.S. beef are a large part of the price cattlemen see at the scales. Peel said the U.S. has to resolve its trade issues with our customers so that market access can be preserved for future cattle crops.
Jennifer M. Latzke can be reached 620-227-1807 or firstname.lastname@example.org.