North American cattle prices are likely to stay high until at least 2019, say market experts, but the future beyond that is riding on cow herd expansion.
John Paterson, a consultant with the National Cattlemen’s Beef Association, said the North American cow herd numbers 28 million head, and markets look good until it expands to 32 million.
“No matter where you go in the United States, everybody says, ‘we’re going to retain animals.’ That’s what they say. Are they really going to do it?” Paterson asked those at a March 31 feedlot meeting.
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Recent figures indicate herd expansion has begun in the United States, likely because of good supply and demand fundamentals, high international demand, lower cost feed in most areas and less volatility in input costs.
However, working against expansion are drought in some regions, environmental restrictions, input costs, industry consolidation and limits on available credit.
Without expansion, producers run the risk of missing opportunities to capitalize on consumer tastes for quality beef.
Paterson quoted Randy Blach of Cattlefax, who said the herd must expand within the next one to four years.
If it doesn’t, there will be a smaller industry and beef will move from the centre of the plate to a specialty item, such as steak salad.
“None of us want to see that happen,” said Paterson.
He listed five factors that will influence herd rebuilding in North America:
- financing
- forage availability
- options for replacements
- value of replacements
- generational turnover
The last factor refers to recent statistics that show producers aged 35 to 54 are the ones most frequently leaving the cattle business.
