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Great Time to Own Cattle, but . . .

David Ekstrom 03/24/2014 @ 4:44pm

“With record-high beef prices, it’s a great time to be in the cattle business,” says Scott Brown, assistant research professor of agriculture and applied economics at the University of Missouri college of agriculture.

The beef economist’s outlook shows a $250 return per cow in the coming year whereas in the previous cycle, it was under $100 per cow. 

“We’ve never seen anything like current prices,” Brown said.

Brown showed price projections from the Livestock Market Information Center. Their cow-calf returns show $350 for 2014 and 2015. These returns are over cash plus pasture rent. 

Brown reminds cattle owners to remember the cycle: When numbers go down, prices go up. However, when numbers go up, prices go down.

Some factors to consider when planning the cycle are:

  • Keep up with the demand for domestic beef.
  • Remember to be efficient. The least-cost production makes the difference and everybody needs a risk strategy.
  • Consider the price of corn in your market cattle. “Corn at $4.50 per bushel looks better than corn at $7.50. Recall, we didn’t think $4.50 corn looked so good on the way up,” Brown says.
  • While export is important, if China opens its doors to U.S. beef, it could open a lot of doors. However, domestic consumption remains your main market.

Brown reminded producers of risks: The time to expand may be now, but breeding cattle takes time. New calves from this spring won’t be ready for market for quite a while, and by then prices may decline. “The biggest risks right now are disease outbreaks and weather’s impact on crops and forages,” says Brown.

Check out the chat in Cattle Talk: Cattle cycle, where are we.

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