Spring rains have brought some relief to the Southern Plains. The on-going drought conditions have held down cattle numbers in Texas, Oklahoma, New Mexico, Kansas and Missouri. According to Oklahoma State University Livestock Market Economist Dr. Derrell Peel said the drought mind set has a lot of times trumped what producers have wanted to do on rebuilding the mamma cow herd.
“I think it’s pretty clear that producer’s intensions were somewhat different than what the reality was that they had to deal with,” Peel said.
Peel said he doesn’t think producers have had a liquidation mindset for the last three years. He thinks producers have been ready to expand their cowherd and they were aware the industry was smaller than necessary, but physically they haven’t been able to expand. Peel said there a certain amount of pent up expansion, which may explain what he calls the “spike off the bottom”. That is the rapid transition from liquidation to expansion. That spike off the bottom was seen clearly earlier this year when the U.S. Department of Agriculture cattle inventory report showed strong growth in beef cow numbers in Oklahoma and Texas as well as retention of beef heifers.
With strong cattle prices, producers have to decide if they will hold onto heifers to help rebuild or capture the strength of the market and sell them off. Peel said a lot of that depends on the age of the producer and their plans for staying in the cattle business long term. He said in the big picture it doesn’t matter who individually is expanding.
“It doesn’t matter who’s doing it, what we are worried about at the industry level is that it gets done,” Peel said. “But for the individual producers, it’s very much a question of whose going to do it and so depending on how that plays out that can have an impact on the overall productivity and really the speed with which things happen in this industry over the next few years.”
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