Beef herd expansion in the US is still on hold so the outlook for beef prices holding up is good. That's good news to me the producer, we won't talk about you the consumers. The funny thing is that weather is still the driving force here just like it is on fires recently. Everybody keeps trying to blame the fires on a lot of different things but in truth, the weather is driving it as it's driving the cattle herd. The ability for producers to expand has been hampered by the continuing drought conditions in the US.
There are places where there has been years of drought affecting production but severe hits seem to move around the country in waves causing people to sell mother cows stifling any increase in the beef herd expansion. Combined with continued good demand for beef this is all good news for me but nothing surprising. The writings been on the wall for a while now but it's good to see the numbers.
It would have been nicer to see a little higher prices for calves this fall. Some people would say they are high enough but with the cost of energy and feed I'm not so sure. I think the reason they stayed at last year levels and didn't go up any was that feed prices are so high due to the drive to turn our food into fuel. Everybody knows my opinion of that so I won't go into it but I don't like it.
This news is sure to make a lot of cattle producers happy. I don't blame them, good news is always nice.
We are all primary numbers divisible only by ourselves. Jean Guitton
Wednesday, August 29. 2007
Outlooks
Monday, June 11. 2007
Cattle Herd Expansion Delayed
No Herd Expansion Expected For Several Years
I had come to the same conclusion myself about the Cattle herd. I can't say I used the same thought process but it just seemed to make sense to me.
As usual the biggest factor in the thoughts on this is corn prices. With ethanol sucking up so much corn the cost of feed will be a limiting factor on prices and herd expansion. There is not the pressure to expand the herd size since there is so much uncertainty about the availability and price of corn. Between the corn and the droughts we have been experiencing producers are unsure if they have the feed resources for expansion. I am going to have more feed than I need with the rain this spring but does that mean I should try to expand? What's going to happen next year with the weather? I might drought out big time and ruin my plans. The uncertainty of feed is a big factor.
The author of the article believes that beef demand will stay good and consumers are willing to pay the higher prices for beef. There is plenty of feedlot space so for cow-calf producer prices should remain steady if we don't expand the herd too much.
I wonder sometimes too if the producers don't know that they will hurt themselves by expanding the herd. They will be punished with lower prices so hey are careful not to push too hard on keeping heifers. Would producers act in such a way to benefit their interests or would it be more normal to try to expand and cash in more money? Classic economics would indicate that producers would expand the herd to bring in more money driving prices down in the long run. Looking beyond that though, producers could also be squeezed by the rising costs of all inputs, like fuel, and need to continue to sell all the calves they can to make ends meet.
Whatever the reasons, I agree with this economist, calf prices should be decent this year and I don't see much in the way of herd expansion. It's just a feeling for me so we will see. It keeps things interesting.
Often undecided whether to desert a sinking ship for one that might not float, he would make up his mind to sit on the wharf for a day. Lord Beaverbrook
Say all you want about historically high cattle prices, the longest sustained period of cow-calf profitability on record, robust consumer beef demand and the growing seasonal prospects for more grass and forage.
"We didn't expand the herd last year, we won't this year, and I don't believe we'll grow it to any degree for the next several years," says Bill Helming, of Bill Helming Consulting Services at Olathe, KS.
Net economics appear to be the growing reason.
I had come to the same conclusion myself about the Cattle herd. I can't say I used the same thought process but it just seemed to make sense to me.
As usual the biggest factor in the thoughts on this is corn prices. With ethanol sucking up so much corn the cost of feed will be a limiting factor on prices and herd expansion. There is not the pressure to expand the herd size since there is so much uncertainty about the availability and price of corn. Between the corn and the droughts we have been experiencing producers are unsure if they have the feed resources for expansion. I am going to have more feed than I need with the rain this spring but does that mean I should try to expand? What's going to happen next year with the weather? I might drought out big time and ruin my plans. The uncertainty of feed is a big factor.
The author of the article believes that beef demand will stay good and consumers are willing to pay the higher prices for beef. There is plenty of feedlot space so for cow-calf producer prices should remain steady if we don't expand the herd too much.
I wonder sometimes too if the producers don't know that they will hurt themselves by expanding the herd. They will be punished with lower prices so hey are careful not to push too hard on keeping heifers. Would producers act in such a way to benefit their interests or would it be more normal to try to expand and cash in more money? Classic economics would indicate that producers would expand the herd to bring in more money driving prices down in the long run. Looking beyond that though, producers could also be squeezed by the rising costs of all inputs, like fuel, and need to continue to sell all the calves they can to make ends meet.
Whatever the reasons, I agree with this economist, calf prices should be decent this year and I don't see much in the way of herd expansion. It's just a feeling for me so we will see. It keeps things interesting.
Often undecided whether to desert a sinking ship for one that might not float, he would make up his mind to sit on the wharf for a day. Lord Beaverbrook
Friday, April 13. 2007
Cattle Herd News
It appears that the US cattle herd is not expanding at the present time. This can be seen because female slaughter is keeping pace with steer slaughter which is a strong indicator that the US herd is remaining steady.
This is really good news because we have had a few good years, marketing wise, in a row now and usually that would cause the herd to expand so producers can take advantage of the situation. It's not happening this time for a lot of factors. The two biggest ones being the weather and ethanol.
There has been enough weather disasters that have hurt cattle producers in the past couple of years, hurricanes, drought, blizzards, that while some producers in favored areas might be trying to expand, those in the areas affected are liquidating there herds so we are keeping steady pace.
The other factor, ethanol, is easy to figure. People are just unsure what corn prices are going to look like and if there will be affordable corn to feed cattle in another year. Corn planting news out of the Midwest supports this. They are planning on planting more corn, but the weather is not cooperating and there is worries whether they will be able to get all they want planted to supply all the needs that are being demanded by the corn markets.
As usual we will have to wait and see but I'm sure glad there is no expansion going on. That really drives prices down for producers and makes life tough. Things are tough enough around here without that worry around my neck.
Don't limit yourself. Many people limit themselves to what they think they can do. You can go as far as your mind lets you. What you believe, remember, you can achieve. Mary Kay Ash
This is really good news because we have had a few good years, marketing wise, in a row now and usually that would cause the herd to expand so producers can take advantage of the situation. It's not happening this time for a lot of factors. The two biggest ones being the weather and ethanol.
There has been enough weather disasters that have hurt cattle producers in the past couple of years, hurricanes, drought, blizzards, that while some producers in favored areas might be trying to expand, those in the areas affected are liquidating there herds so we are keeping steady pace.
The other factor, ethanol, is easy to figure. People are just unsure what corn prices are going to look like and if there will be affordable corn to feed cattle in another year. Corn planting news out of the Midwest supports this. They are planning on planting more corn, but the weather is not cooperating and there is worries whether they will be able to get all they want planted to supply all the needs that are being demanded by the corn markets.
As usual we will have to wait and see but I'm sure glad there is no expansion going on. That really drives prices down for producers and makes life tough. Things are tough enough around here without that worry around my neck.
Don't limit yourself. Many people limit themselves to what they think they can do. You can go as far as your mind lets you. What you believe, remember, you can achieve. Mary Kay Ash
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