The "Cow Calf Corner", co-authored by Dr. Derrell Peel, delivers insightful analyses on the beef cattle industry. This week, it delves into the perplexing matter of stalled herd expansion despite surging cattle prices.
An overview of the current cattle inventory portrays shrinking numbers, and data doesn't signal any significant herd rebuilding. Dr. Peel points to a combination of causes:
The Drought Issue: Continuous drought conditions are prevalent in primary cattle-raising regions. These droughts aren't just hampering herd growth but also hinder the recovery of post-drought areas.
Diminishing Forage Supplies: With droughts wreaking havoc in the past years, hay supplies have been drastically reduced. The potential of recurrence of such droughts further clouds the prospect of consistent forage production.
Economic Challenges: Many cattle operators, battered by past droughts and soaring input costs, find themselves in tight financial spots. The allure of the current high cattle prices might be prompting quick sales.
Skyrocketing Input Costs: 2022 was marked by all-time high input costs. From hay to fertilizer, prices reached staggering levels. Although a slight respite came in 2023, the overall volatility makes producers wary.
Interest Rate Dynamics: The surge in interest rates introduces a new layer of economic complexity. These rates, combined with escalating breeding costs, will significantly impact finances.
Shaping Producer Expectations: These challenges collectively sculpt the mindset and expectations of producers. Until a consistent promise of long-term returns materializes, herd expansion might remain on the back burner. In the interim, market dynamics suggest rising calf and feeder cattle prices, potentially acting as a catalyst for herd expansion.
People are hopeful, thinking that the end of 2023 and 2024 might be when we see bigger growth in cattle herds.
Source : wisconsinagconnection