Page 6 - Aug242023
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Several Reasons for Slow Herd Expansion                                                    The Midwest Cattleman · August 24, 2023 · P6

                 By Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

                           The mid- additional herd liquidation  Record hay prices
                        year     cattle from a broader market per- and elevated sup-
                        inventory re- spective, it surely is prevent- plemental             feed
                        port showed  ing herd expansion in those  costs have had a
                        that     cattle drought-stricken areas.             huge impact in
                        numbers con-        Drought Recovery - Pas- drought regions.
                        tinue to get  tures and ranges in loca- Record or near-re-
                        smaller and  tions recently emerged from  cord high fertil-                           ute to the economic back-
      there is no significant indica- drought need time to heal  izer, chemical and fuel costs  drop  of the industry and
      tion of herd rebuilding so far.  after 2-3 years of drought  have been a significant chal- become part of the produc-
      Despite sharply higher cattle  damage and stress. Hay sup- lenge for producers, especial- er expectations that are the
      prices this year, there is no  plies  are depleted  and must  ly in regions of introduced  key to herd rebuilding. Until
      data to suggest heifer reten- be replenished. Many regions  pastures. Though some input  enough cow-calf producers
      tion or enough decrease in  are still vulnerable to rede- prices have moderated in  anticipate enough returns
      beef cow slaughter to initiate  veloping drought and there  2023, input price uncertainty  for a long enough period of
      herd expansion, although the  is uncertainty that forage  has producers reacting cau- time, herd expansion will be
      most recent weekly slaugh- production  may  remain  re- tiously to higher cattle pric- tempered. In the meantime,
      ter data are encouraging. The  stricted.                              es.                               cattle  supplies  will  continue
      process thus far is consid-           Financial Recovery - Many         Interest Rates - Not only  to tighten. Market prices for
      erably slower than the herd  cattle operations have suf- are input costs higher but  calves and feeder cattle will
      expansion after the drought  fered from considerable fi- sharply higher interest rates  continue to increase as the
      in 2011-2013 pushed cattle  nancial stress from drought  create a different economic  market provides more price
      inventories to a cyclical low  and high input costs.  The  climate that may temper the  incentives that will even-
      in 2014.  There are several  short run need to realize im- pace of herd expansion com- tually strengthen producer
      reasons why producers are  mediate returns from higher  pared to the 2014-2019 peri- expectations and jump-start
      moving more slowly and cau- cattle prices may be causing  od. Higher finance costs will  herd expansion. That process
      tiously thus far.                  continued heifer and cull cow  be a much more significant  is likely to begin in earnest
         Continuing Drought is  sales for now.                              factor as breeding heifer and  in the remainder of 2023 and
      still an issue in significant         Input Cost Uncertainty -  cow costs rise in the coming  into 2024.
      regions of cattle country.  High, and in many cases re- months.
      While  drought is not like- cord high, input prices were a              Producer Expectations - All
      ly causing a great deal of  particular challenge in 2022.  of the above factors contrib-

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