Though 2013 is likely another year of beef cow herd liquidation, the improvement in conditions in the second half of the year may provide a period of stabilization that often occurs in the first year of herd expansion, according to Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.
"As long as drought conditions continue to moderate the situation, beef cow herd growth of 2% is possible in 2014 with an additional 2% to 3% in 2015," Peel said.
More rapid growth is unlikely when all factors are considered. Among several implications, Peel believes, is an approximately 7% decrease in total cattle slaughter in 2014.
A historical context
Historically, the cattle cycles observed by the beef industry have been largely self-regulating cycles of inventory driven by internal factors such as calf price levels, beef cattle biology and the availability and quality of forage resources.
However, much of the beef cow herd liquidation that has occurred since 2001 – including the aborted herd expansion of 2004 and 2005 – were the result of external factors, including input market shocks that reduced cow-calf profitability, a national and global recession that tempered cattle prices and severe drought in important cattle-producing states.
"The last 3.4 million head decline in the beef cow herd was not due to typical cattle cycle factors," Peel said. "External factors have masked and overwhelmed cyclical tendencies and don't necessarily mean the cattle cycle is gone or irrelevant, although some people have said so."
In situations where drought has forced inventory adjustments that are counter to what producers want to do, the details of how the adjustments happen become vitally important, Peel stresses. In short, how the industry got to where it is will have a significant effect on how beef herd expansion will take place in the future.