A question received this week was if I thought the cattle market was taking the shape of 2014 and 2015.
First, the skyrocketing of prices in 2014 and 2015 seem like yesterday, but that was eight years ago. Second, there are several similarities in today’s environment and what led up to the record cattle prices of 2014 and 2015. Third, I hope it is not a repeat of that time period.
Drought in cattle country from 2011 through 2013 is what precipitated a smaller cattle herd in 2014 and thus led to higher prices. Severe drought in 2012 in corn producing states that resulted in higher feed prices also contributed. Prices increased throughout 2014 and 2015 and part of 2016 before the bottom fell out of the market.
I do see similarities between the current environment and eight years ago, but it is doubtful that cattle producers will be as aggressive to rebuild the cattle herd as in the previous time period. Thus, prices will increase and likely do so for a longer period of time, and the hope is that prices do not decline as quickly on the other side.
Source: University of Tennessee