Page 9 - MWC 8-10-2023s

DROUGHT’S LASTING IMPACT The Midwest Cattleman · August 10, 2023 · P9

By Greg Henderson
Keenly aware marketing (the federal government) is stock their herds,
leverage had swung in their taking with money printing,” he believes, even
favor as the calendar turned Swift says. “Starting in 2008, as prices encour-
to 2023, cattle producers an- the U.S. began a massive stim- age expansion.
ticipated the opportunity to ulus program that printed Swift also proj-
heal financially. Reminiscent money and lowered interest ects stakeholders
of the previous price boom in rates. I believe in that time up and down the
2014, widespread drought fu- frame some producers held chain will make
eled cow culling at historic lev- back cows that should have adjustments to
els and tightened feeder cattle been sent to slaughter be- cope with high-
supplies to 60-year lows. cause the prospect of another er beef prices.
This year’s market, howev- calf was so valuable.” One adjustment
er, is not, as Yogi Berra once In 2023, however, Swift says to smaller cat-
said, “déjà vu all over again.” economic policy is now trying tle supplies is for
While many similarities exist to take money out of the sys- feedlots to grow
— smaller supplies, higher tem. He believes efforts by the cattle to heavier
prices, and robust ranch profit- federal government to manage weights, a trend already oc- COUNTING HEIFERS
ability — today’s beef industry inflation will impact the beef curring in some instances. While current prices clearly
faces many differences, some industry. As Swift describes A second response to the signal herd expansion is war-
with long-term implications it, the battle against infla- tightening supply of cattle ranted, the industry remains
for the industry as a whole. tion (too much money for the could be a reduction in feedlot crippled as the drought is far
“Quite a bit of difference,” amount of goods and services) capacity. from over and showing signs of
says Chris Swift, Swift Trad- comes at a time when cattle “We’re seeing a lot of pen expansion into the Corn Belt.
ing Co., Brentwood, Tenn., re- inventories are at cycle lows. space open up,” Swift says. Meteorologists at NOAA’s
garding the markets a decade “We haven’t ended the liqui- “Cattle feeders continue to bid Climate Prediction Center
apart. In Swift’s opinion at dation phase, yet.” Swift says. against one another for inven- believe the U.S. precipitation
least two major factors exist “But as the industry tries to tory and keep occupancy rates outlook is improved as El Niño
between the 2013/14 market expand, I believe we will be profitable. We may see some conditions — the warming of
and the one unfolding this expanding into a shrinking of the corporate yards buying surface waters in the eastern
year. money supply.” smaller yards and mothball tropical Pacific Ocean — have
“The biggest difference is Higher interest rates will them, shut them down, reduce emerged.
the economy, and the direction hinder producer efforts to re- the bunk space.” continued on page 24

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