What is in this article?:
- Cattlemen may pull trigger on beef herd expansion this fall
- Higher calf prices also needed
• The industry may see the start of heifer retention this fall, but the magnitude of expansion is expected to be low and slow to get under way.
• Beef cow producers know that expansion of the herd is a long-term investment, and generally want a more extended period of favorable returns before making major financial commitments.
Higher calf prices also needed
Lower feed prices alone will not be enough to get retention started, but higher calf prices will be required as well.
That process is also under way. Oklahoma 500 to 550 pound calves have increased by about $0.15 per pound since early June and 600 to 650 pounds steer calves by $0.13. Current prices are $1.65 and $1.55 per pound, respectively. However, these levels are not likely to stimulate any major beef cow herd expansion.
It is more likely that prices of $1.75 to $2 may be required to convince brood cow operations to move aggressively toward more cows.
The already low inventory of finished cattle and some added heifer retention will keep beef supplies falling in the coming 12 months. USDA expects beef production to be down about four percent in the last-half of 2013 and by five percent in the first-half of 2014.
This should provide the foundation for finished beef prices to average in the higher $120s to low $130s. These finished cattle prices, along with lower feed prices, should propel calf prices back to $1.75 per pound and higher.
Finished cattle prices are expected to trade in the low $120s per hundredweight in the third quarter, but move to the higher $120s for the final quarter of 2013.
First-half 2014 prices are expected to average near $130, with early spring highs in the low-to-mid $130s. Calf and feeder cattle prices should follow the finished cattle prices higher, especially as feed prices also drop.
The industry may see the start of heifer retention this fall, but the magnitude of expansion is expected to be low and slow to get under way.
Beef cow producers know that expansion of the herd is a long-term investment, and generally want a more extended period of favorable returns before making major financial commitments.
In addition, nearly one-half of the country’s cows are in regions that have not yet fully emerged from the drought.
Prices of calves may need to move closer to $2 per pound to provide the incentive that will provide for a more major beef expansion.
Both the poultry and pork industries are set to increase production rapidly as feed prices decline.
Retail beef prices, already at record highs, will move even higher in the coming 12 months at a time when poultry and pork price increases are moderating or even falling. This will mean stiff competition for beef among domestic and foreign consumers.
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