Page 35 - MWC 10-6-2022s

The Midwest Cattleman · October 6, 2022 · P35
MAXIMIZING PROFITS UNDER DROUGHT CONDITIONS,
MAXIMIZING PROFITS UNDER DROUGHT CONDITIONS,
HIGHER INPUT COSTS AND NA
HIGHER INPUT COSTS AND NATIONAL HERD LIQUIDATIONTIONAL HERD LIQUIDATION
Factors to consider include herd liquidation, rebuilding, payoffs and more.d liquidation, rebuilding, payoffs and more.
Factors to consider include her
by Elliott Dennis, University of Nebraska–Lincoln

Cow-calf producers have not ing herd liquidation should 3.High cull-cow prices — red meat market, consumers
faced this confluence of compet- continue are: Cull-cow prices have begun to have shown they are willing
ing factors in the last 40 years. 1.Ongoing drought — The rise dramatically in 2022 due to continue to purchase beef
Some factors indicate cow-calf drought in parts of Nebraska to seemingly insatiable con- at elevated prices. This has led
producers should continue and more broadly throughout sumer demand for ground beef retail and foodservice beef de-
herd liquidation, while other the United States during the and lower beef imports from mand to levels not seen since
factors indicate there should past several years has reduced Australia and Brazil. Low the 1980s.
be greater retention. What we total hay inventory. 2022 could prices during the last several 3.Higher fed- and feeder-cat-
do know from the USDA Na- be year 3 of the most recent years have incentivized some tle futures prices — Both the
tional Agricultural Statistics drought. If (when) the drought producers to turn their herd fed and feeder Chicago Mer-
Service (NASS) January 2022 materializes, it could further over now when there are prof- cantile Exchange (CME) price
Cattle Inventory report is that limit both forage production its to be made. indicate strong demand in the
beef cows are down 2%, heifers and quality. Some of the factors indi- current and deferred months.
held back for beef cow replace- 2.High feed costs — Pro- cating herd rebuilding should Futures plus historical basis
ments are down 3%, and heif- spective corn plantings are begin include: as a forecast for fall delivery
ers expected to calve this year down with more grain produc- 1.Strong export demand — of feeder cattle indicate that
are down 3% year over year. ers choosing to plant soybeans. Demand is strong in the export current prices would be some
All of this indicates small- This indicates that, barring a market. In 2021, the United of the highest prices producers
er feeder-cattle supplies in large South American crop, States set a record for beef ex- have received in the last five to
2022 and 2023. That is what producers should expect high- ports. Demand has remained seven years.
we know. What we don’t know er corn prices. Likewise, high- strong in the first part of 2022, Why is this year so
is what decisions should be er corn tends to correlate with and beef has seen more than unique?
made to further liquidate the higher distillers’ grains prices, a 50% increase in export de- This year is unique because
cow herd or begin rebuilding both of which increase ration mand since 2010. the cattle market has not si-
efforts given current and ex- costs and reduce the willing- 2.Strong consumer demand multaneously faced higher
pected market conditions. ness of feedlots to purchase — Even with higher levels of
Some of the factors indicat- feeder cattle. inflation, particularly in the continued on page 36

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