Cattle and beef markets across the board have jumped sharply in the past several weeks, and both live-cattle and feeder-cattle futures prices suggest that the industry is in for an extended period of largely unprecedented cattle prices.
If allowed to work freely, markets will provide whatever signals are needed to take care of any market situation. Right now, the signals are quite obvious: Calf prices will continue to rise until there is sufficient incentive to increase cow-calf production.
“The predicament now is that current feeder values are high and going higher, which makes it difficult to retain heifers, and yet we have to push calf prices overall high enough to make the value of future production enough to encourage heifer retention,” says Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist at Stillwater.
Peel adds that this process is typical of every cattle cycle. However, never before have there been such limited beef inventories that the tradeoff was quite so dramatic.
Another prevailing signal is the need to reduce use of expensive feed grains, leading to the need to encourage forage-based weight gains.
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