Page 6 - Aug242023

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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