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A Brief History of Cattle Cycles                                                        The Midwest Cattleman · September 30, 2021 · P6

                                                                            By Derrell Peel - Oklahoma State University

         The cattle cycle is perhaps  less of whether the industry  It takes rather exaggerated
      the  most  iconic  characteris- is trending larger or smaller.   price signals to encourage
      tic of the U.S. cattle industry.   Cattle inventories trended  the cow-calf sector to change
      Cattle cycles emerged as the  higher from 28.6 million head  course and the lengthy biolo-
      ranching industry developed  in 1867 to 132.0 million head  gy of cattle production makes
      in the late 1800s. Cattle in- in 1975, an increase of 361%  changing course a slow pro-
      ventory data shows that the  over 108 years.  Cattle inven- cess.
      number of cattle in the U.S.  tories have trended generally             Perhaps most important
      was 28.6 million head in  lower since 1975.  The 2021  is the interaction between
      1867, just after the Civil War.   inventory of 93.6 million  production and reproduction  15 of 18 years from 1996 to
      Cattle numbers expanded  head  is down  29.1 percent  in the cattle industry.  Since  2014.  The most recent cattle
      continuously to 60 million  from the peak in 1975 but  cattle have offspring one a  cycle began with an invento-
      head by 1890, the first cycli- is 226.8 percent higher than  time, the process of expand- ry low of 88.24 million head
      cal peak.                          the 1867 level.                    ing  production  when  inven- in 2014 with cattle numbers
         Cattle numbers liquidat-           Cattle cycles reflect a vari- tories are too low means that  increasing to 94.8 million
      ed to 49.2 million head by  ety of drivers that affect the  tight supplies are made even  head in 2019.
      1896 before expanding again.   cow-calf sector, the primary  tighter to retain heifers for                 Modest cyclical liquidation
      This was the first of continu- supply source for the indus- increased production and  in 2019 and 2020 brought
      ous cattle cycles, which have  try.   Most important  among  likewise too much supply  cattle inventories down to
      continued since.  Cattle cycles  these drivers are changes in  is made even larger in the  93.6 million head in Jan-
      can be measured from peak  calf  prices  that  determine  short run as more cows are  uary 2021.   Herd liquida-
      to peak or trough to trough.  cow-calf sector revenues but  culled and fewer heifers are  tion is being exaggerated by
      There have been a total of 12  input price changes that like- retained for production.                  drought in 2021.   It is not
      cyclical peaks and 11 cyclical  wise impact returns can also            The latest cyclical expan- clear exactly how much and
      troughs since the first peak  drive cattle cycles.   Periodic  sion from 2014 – 2019 was  how fast the industry will
      in 1890.  Often described as  droughts can provoke or pro- the first significant cyclical  liquidate going forward but
      a  “ten-year cycle”, the time  long cyclical liquidation and  expansion since the period  cattle cycles continue to be
      between peaks and between  have multi-year impacts on  from 1990-1996.    A muted  an important fundamental
      troughs has averaged 12.8  cattle industry trajectory.                cycle from 2004-2007 result- feature affecting cattle mar-
      years.                                Cattle cycles continue to  ed in very little expansion be- kets in the U.S.
         Cycles have been a feature  be a regular feature of the  fore more liquidation to 2014.
      of the cattle industry regard- industry for several reasons.   Cattle inventories declined

                                                                                                                    TERRITORY MANAGERS                                                                                           Gary West  731-335-3023
                                                                                                                  Jeff Anslinger  816-244-7340
                                                                                                                  Logan  Kennedy 417-592-1764
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