The markets and cattle producers alike continue to watch the rate of expansion within the cow herd.
With the latest inventory report showing numbers not seen since the 70s, Randy Block with CattleFax says beef cow slaughter must go lower in order to get back into expansion. Right now, slaughter is down around 700,000 head, but he says it is still at a liquidation pace. As an industry, cow liquidation and heifer retention are not happening in large numbers, but Block says that will change. He says producers could keep females from the current calf crop.
“You’ve got too much financial incentive now for producers. With calf prices this much above the cost of production, we’ll start retaining. I think the rate of expansion will be interesting with interest rates where they are today, again, if you look at the cost of interest at the cow-calf level, at the stocker level, and at the feedlot level, you add all those together and that’s close to a $200 bill today. That’s what it takes to go all the way through the system. That by itself is going to be a limiting factor.”
Despite more moisture this time of year, Block says many places are still suffering. He says risk management will be key moving forward with high input costs still putting pressure on cattle producers.
