Page 6 - Sep302021

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

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