Herd Expansion?

Is the expected cattle herd expansion finally beginning to happen? <a href="http://www.cattlenetwork.com/content.asp?contentid=2524">This story</a> indicates that maybe it is. Total inventory of cows and calves is down again, explaning the current high prices, but there is a 4% rise in heifer retention that signals a herd expansion.<br />n<br />nThe whole herd expansion question has been an interesting one for a couple of years since it has been expected but not happening. In the businiess there is what is called the "cattle cycle" but is really nothing more than supply and demand. When cattle prices get high, people start keeping heifers for breeding stock. Eventually once the breeding stock starts getting into full production more beef starts getting to be produced which eventually drives the prices down until people start selling breeding stock again which then will dry up the cattle supply causing prices to go back up. This whole cycle takes quite a while since a cow only has one calf a year and it takes two years to get a hiefer into production.<br />n<br />nPeople have been expecting heifer retention to start for a while and with the prices we are experiencing now it will probable continue. The one thing of real interest to note is where the expansion is taking place and where it is not. Expansion is taking places in those areas that are not experiencing a <a href="http://www.cpc.ncep.noaa.gov/products/expert_assessment/seasonal_drought.html">drought</a> while those areas that are in a drought have yet to see expansion. This tells me that people are running the maximum number of cattle they can in drought areas and they just can't support any more.<br />n<br />nWell this all means that prices should stay good for a while yet if you can find enough feed for the critters in this drought. Interesting if you are in the cattle buisness, but if your not it is probably pretty boring.<br />n<br />n<b>The best people renounce all for one goal, the eternal fame of mortals; but most people stuff themselves like cattle. Heraclitus</b>