The concept of the cattle cycle has all but disappeared.

Nevil Speer

June 24, 2014

1 Min Read
Industry At A Glance: Changes In Beef Cow Inventory Vs. Changes In Calf Price
<p>Cow-calf producers haven&rsquo;t been behaving typically these days, as the cattle cycle has all but disappeared.&nbsp;</p>

Will 2014 be a year of reversal in which cow-calf producers begin to rebuild their inventory? That’s an all-important question, and it’s seemingly been discussed more in recent weeks given the market’s strong counter-seasonal moves. The general thinking goes that with calf and yearling prices establishing new all-time highs and a favorable outlook for corn, this will be the year to turn around the decline in cow numbers. 

Typically, the cow-calf sector reacts to improving prices by retaining more heifers and/or culling fewer cows. The pragmatic evidence indicates that decision-making has become much more complicated. That is, producers have sold off approximately 1% of the cowherd since 1996 independent of the yearly change in prices.

In other words, since that time, producers have not responded in typical fashion; the concept of the cattle cycle has all but disappeared. Cow-calf producers haven’t responded to price signals during the past several decades. A number of other overriding factors have seemingly dictated their decision-making process, including weather, feed costs, etc.

Annual Change: Cow Inventory vs. Average Calf Price

Given the occurrence in recent history in regard to market prices and beef cow inventory, how do you see producers responding to higher prices in 2014? Will they be sufficiently high to change the trend? Are the other factors involved in the decision-making process also aligning to support rebuilding the cowherd? Leave your thoughts below.

 

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About the Author(s)

Nevil Speer

Nevil Speer serves as an industry consultant and is based in Bowling Green, KY.

Nevil Speer has extensive experience and involvement with the livestock and food industry including various service and consultation projects spanning such issues as market competition, business and economic implications of agroterrorism, animal identification, assessment of price risk and market volatility on the producer segment, and usage of antibiotics in animal agriculture.
 
Dr. Speer writes about many aspects regarding agriculture and the food industry with regular contribution to BEEF and Feedstuffs.  He’s also written several influential industry white papers dealing with issues such as changing business dynamics in the beef complex, producer decision-making, and country-of-origin labeling.
 
He serves as a member of the Board of Directors for the National Institute for Animal Agriculture.
 
Dr. Speer holds both a PhD in Animal Science and a Master’s degree in Business Administration.

Contact him at [email protected].

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