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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

                                                                                       Sancrest Trailer Sales
                                                                                       Billings, MO
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