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Beware: Good Times for Beef Producers Are Here

The road to cow herd expansion is fraught with pitfalls.

An old saying goes something like this: "When things are not going well, watch out, and when things are going well, watch out more."

From a market perspective, a host of factors have things going well for cow-calf producers.

  • Cattle inventories are the smallest in more than 60 years, severely restricting feeder cattle available to place and keeping feeder cattle prices at lofty levels.

  • Nationally, feedlots have surplus bunk space. Feedlots lose less by operating at capacity as long as revenues cover variable costs and leave something to apply toward fixed costs. That fuels competition to buy feeder cattle.

  • Feedlot managers do not like to see empty pens. Their psychological desire to fill pens further intensifies competition to buy feeder cattle.

To read Otte's column, click here.


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