Cattle Herd Expansion Delayed

<a href="http://beef-mag.com/cowcalfweekly/herd-expansion-expected/index.html">No Herd Expansion Expected For Several Years</a><br />n<br />n<blockquote>Say all you want about historically high cattle prices, the longest sustained period of cow-calf profitability on record, robust consumer beef demand and the growing seasonal prospects for more grass and forage.<br />n<br />n"We didn't expand the herd last year, we won't this year, and I don't believe we'll grow it to any degree for the next several years," says Bill Helming, of Bill Helming Consulting Services at Olathe, KS.<br />n<br />nNet economics appear to be the growing reason.</blockquote><br />n<br />nI had come to the same conclusion myself about the Cattle herd. I can't say I used the same thought process but it just seemed to make sense to me.<br />n<br />nAs usual the biggest factor in the thoughts on this is corn prices. With ethanol sucking up so much corn the cost of feed will be a limiting factor on prices and herd expansion. There is not the pressure to expand the herd size since there is so much uncertainty about the availability and price of corn. Between the corn and the droughts we have been experiencing producers are unsure if they have the feed resources for expansion. I am going to have more feed than I need with the rain this spring but does that mean I should try to expand? What's going to happen next year with the weather? I might drought out big time and ruin my plans. The uncertainty of feed is a big factor.<br />n<br />nThe author of the article believes that beef demand will stay good and consumers are willing to pay the higher prices for beef. There is plenty of feedlot space so for cow-calf producer prices should remain steady if we don't expand the herd too much.<br />n<br />nI wonder sometimes too if the producers don't know that they will hurt themselves by expanding the herd. They will be punished with lower prices so hey are careful not to push too hard on keeping heifers. Would producers act in such a way to benefit their interests or would it be more normal to try to expand and cash in more money? Classic economics would indicate that producers would expand the herd to bring in more money driving prices down in the long run. Looking beyond that though, producers could also be squeezed by the rising costs of all inputs, like fuel, and need to continue to sell all the calves they can to make ends meet.<br />n<br />nWhatever the reasons, I agree with this economist, calf prices should be decent this year and I don't see much in the way of herd expansion. It's just a feeling for me so we will see. It keeps things interesting.<br />n<br />n<strong>Often undecided whether to desert a sinking ship for one that might not float, he would make up his mind to sit on the wharf for a day. Lord Beaverbrook </strong>