One of the most important factors surrounding the beef industry going into 2015 involves whether the industry has committed itself to expansion. The real answer to that question won’t be known until USDA releases its annual Cattle Inventory report. In the meantime, however, there are some indicators we can assess ahead of time.
Most notably, the annual beef cow slaughter rate provides a fairly accurate measure of the following year’s beef cow inventory – or, at the very least, gives us a reliable gauge of the overall direction. And slaughter rate obviously plays an important role in determining the size of next year’s beef cow inventory. That influence is straight-forward: more cows slaughtered means fewer cows retained.
Beef cow slaughter in 2014 will likely fall somewhere around 2.55 million cows (December’s slaughter remains unknown at this time). That’s equivalent to about 8.75% of the 2014 starting inventory. Based on data between 1997 and 2013, that beef cow slaughter rate would leave the industry with a 2015 starting inventory equal to roughly 99.7% of 2014 – or about 28.95 million cows (vs. 29.04 million head in 2014).
While those numbers don’t indicate expansion, they don’t really represent liquidation, either. In other words, the industry appears to be stabilizing at the current inventory of beef cows (that assessment is seemingly consistent with feedyard heifer inventory).
What’s your assessment about the industry’s appetite to rebuild the cow herd? Markets and weather clearly play into the decision to expand; however, what other factors are influencing that decision in the producer segment over the long run? Do you foresee more cows in 2015 vs. 2014? What might the cowherd inventory look like several years from now: more cows, fewer cows, or about the same? Leave your thoughts in the comments section below.
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