Last week, we looked at beef cow slaughter through the first quarter of 2018 and, indirectly, got a glimpse of producer sentiment. Thus far, the industry has liquidated just slightly more than 2.25% of the January 1 starting inventory – that’s right in line with historical equilibrium. In other words, producers are indicating they’re about done expanding the cowherd and that we’ll peak somewhere around 31.7 million cows.
All that said, if the market outlook – and subsequent profitability – shifts unfavorably in the ensuing months, we may begin to see an uptick in beef cow slaughter.
The Livestock Marketing Information Center is currently estimating an average annual return of about $15 per cow over the course of 2018. That’s similar to the 2016 market but off sharply from last year’s favorable return of around $70 per head. Perhaps more important, following 2014 and 2015, the cow-calf business is returning to normal returns over the long run.
Clearly, there’s a huge amount of variation across operations. The most important thing from this week’s illustration are the general differences from year to year. With that in mind, how do your return trends compare with this week’s graph? Will your cows prove profitable in 2018? And if not, how sharp do the losses need to be before you begin considering selling cows? Leave your thoughts in the comments section below.
Speer serves as an industry consultant and is based in Bowling Green, Ky. Contact him at [email protected]