The U.S. cattle herd is down and as a whole contains about 29 million beef cows, he said. “And that’s the lowest number we’ve had in quite some time. … In the last ten years, we’ve lost more than 3 million beef cows in the United States, and if you look at the states and region where we’ve lost those numbers there are really two things that are going on":

  1. Drought-related losses: Cattle herd declines in major cattle states like Texas and Oklahoma are directly attributed to multiple years of drought. “Drought’s a pretty easy fix. As soon as we get rain, then that problem is solved, and there will be an increase in the demand for replacement heifers, beef cows. So we can expect to see a herd increase there,” he said.
  2. Crop-related loses: But in states like Georgia, Missouri and Illinois, or places where row crops compete for available land, the herd decline in those states comes due to relative profitability to crops. When land goes out of pasture production and into crop production, it is difficult to bring those crop acres back into pasture. Fences have to be put back up and pasture established. Crop prices have to either go really low or cattle prices really high to encourage that shift.

“Even though we may see some herd rebuilding here (in Georgia) in the next couple of years, and I think we will, I don’t think we can expect to totally regain the 3 million beef cows just because land has left pasture production and it won’t be back anytime soon,” he said.

He said it will be 2015 or 2016 before any real increase in the size of the U.S. cow herd will be felt enough to shift the market’s current direction.

Disposable meat money

The overall health of the U.S economy directly impacts the livestock side of the road because the products livestock producers provide - meat - doesn’t have as many middlemen to go through as other commodity-related products to get to consumers. So, when disposable income is down, folks don’t buy as much meat.

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Pointing to a chart, Lacy emphasized that most people don’t have as much disposable income as they think. In fact, numbers show disposable income in 2013 was pretty much what it was in 2005. So, even though beef, or red meat, supplies are down and will stay down for a few years, “it is hard to push those higher prices on to consumers because they really don’t have the money to spend,” he said.

The U.S. economy grew in 2013 by 1 percent to 1.5 percent. It is expected to go better in 2014, hitting 2-percent growth or optimistically 3 percent.

“As we get this improving economy, hopefully, consumer income will increase. As a result that should improve the demand we have for livestock products as we head into 2014 and 2015,” he said.