“It looks like we’ve got another 2 to 3 years of profitability left in the cow/calf industry, maybe more. There’s no expansion of the nation’s cow herd taking place. We’re growing exports again. Per capita supplies are declining, and demand is good.”
The biggest thing that’s prevented expansion of the U.S. cowherd and in turn helped sustain beef prices has been Mother Nature.
“You know we’ve had an unprecedented drought that’s moved around this country over the course of the last decade. It was terrible over the southern and central plains over the last two years, and now it’s great. Now the drought situation has moved into the southeast and southwest, so we’ve always had producers that were plagued with drought in significant cow/calf areas.”
Uncertainty in recent years has also been a contributing factor.
“The uncertainly once we had BSE in December of 2003. Everybody said whoa, back here a minute, let’s see how all this sorts out. What’s it mean to us long term? Now we’ve got historically high grain prices. They’re high historically grain prices so I think there’s been a lot of uncertainty in cow/calf world out there on how much do I want to risk? How much do I really want to expand as a result of these risk factors?”
Current prices are lower, but they’re still the third or fourth highest calf prices in history.
“We think we’ll stay at these, about the same kind of levels over the next two to three years, where we’ll sell a lot of calves from $1.15 to $1.20 on average. Yeah, it’s not $1.30, but it’s still a good price level, and it’s a profitable price level for most producers.”
So if you enjoy a good steak, give thanks for a healthy U.S. cow/calf industry. I’m Chace Murphy, tracing the journey our food makes from the farm to our plates, From the Ground Up.
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