As we head into the holidays, it’s time to give thanks and appreciate all the blessings we have received this year. As I talk to producers, even those who have been through so much in terms of drought, wildfires and floods, many continue to focus on the good rather than the bad. That’s part of what makes cattle men and women so great—the ability to acknowledge what they have and to help each other out during times of crisis. But this year has been full of mixed blessings.
One of the positives for the year is continued strong cattle prices, especially for the cow–calf segment. The one cloud over that positive is the continuing drought in the Southern Plains.
It will be interesting to see how the drought impacts inventory numbers and where those misplaced cattle will end up in the coming months.
Southern woes. Many of those cows made their way to slaughter markets, permanently removing them from cowherd supplies.
But some cattle breeders and large cow–calf producers in the Southern Plains looked for, and found, greener pastures farther north for their herds.
Those who couldn’t find hay or pastures were forced to sell off cows, which led to long lines and record volume at auction barns in July and August. There is some concern that those producers may not return to running cattle.
The long-term weather outlook shows that part of the country is in for a long-running drought.
La Niña is the culprit and, unfortunately, is expected to strengthen for the rest of the year and into 2012.
Overall, the nation’s cowherd numbers continue to decline, due in part to the drought; however, the production coming from fewer cows has remained strong.
Exports stay alive. Also on the positive side, increased export demand will help bolster prices for the near term. Market experts expect that 2012 and beyond will be good for cattle prices, if pro-ducers can keep costs in check and put in some risk management strategies to ride through the price volatility.
For cattle feeders, the challenge of reduced numbers means fewer animals to place in pens and tighter to negative margins to feed animals out. Interestingly, though, some are already finding innovative ways to use the pen space, such as growing dairy and beef replacement heifers or even feeding cows until pastures return to normal.
So, as 2011 winds down, take time to appreciate what you’ve been given and to plan for next year.
- December 2011