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Beef herd growth starting slowly

Jeff Caldwell 03/21/2012 @ 8:49am Multimedia Editor for Agriculture.com and Successful Farming magazine.

There's been talk for months that tight beef supplies would turn around years of herd cuts and expansion would begin. Recent numbers show that's starting to happen.

First, how much has the herd slipped? In the last 5 years, beef cow numbers have dropped 9%, about 3 million head. Three percent of that came in 2011 alone, according to Purdue University Extension livestock economist Chris Hurt. That's going to mean fewer calves this year and lower slaughter numbers for the next 2 years.

But, recent moves show that trend is ending. Producers are holding back more heifers; USDA data show beef heifer retention has increased slightly, a sign Hurt says shows herd expansion's starting. But, will this supply growth cause prices to tank?

"This is the first increase in heifer retention since feed prices began increasing," he says. "The modest heifer retention now is actually a price-enhancing factor in the short run. Look for finished cattle prices to push into the higher $120s in the spring, moderate to the mid-$120s this summer, and finish the year near $130. Spring highs in 2013 could climb to the low $130s."

But, there's reason for caution in any major expansion plans right now, Hurt says. Though conditions are improving, last year's drought in the southern Plains still has that region hurting for moisture and feedstocks. And, if recent weather outlooks that show a dry crop season in the Corn Belt reach fruition, feed prices could jump again, likely clipping the modest beef herd growth.

"That raises concerns for corn and soybean meal prices," Hurt says. "Higher feed prices would depress cattle prices."

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