High Cattle Prices: Will They Continue?
If you have anything at all to do with cattle, chances are that you are aware that cattle prices are higher than they have been in quite some time. For many stockmen, this is a welcome change and Eldon Cole, Extension Professional and Livestock Specialist with University of Missouri Extension, weighs in on today’s high market for Ozarks Farm & Neighbor.
Many Ozarks cattlemen have reported great profits within the last year, thanks to high cattle prices.
“Profits were record high in 2014, and 2015 will be another good one. A lot of cow-calf operators have smiled wider smiles than I can ever remember, especially if they owned a number of cows they had pretty well paid off,” noted Eldon.
Many cattlemen in the past have subscribed to what Eldon refers to as “two-calf logic” – if a cow or heifer purchase produces two calves to sell as feeders, then the cow’s next calves will put her in the profit column on the stockman’s spreadsheet. Some economists have reason to believe that this is not always the case.
“When all costs are considered, I’ve seen economist’s summaries indicate it actually takes 5 or more calves to sell for the cow to be profitable, on average,” said Eldon. But he noted if the two-calf logic is believed, the next couple of year’s favorable calf prices certainly support the optimism of stockmen who favor this belief.
The potential for expansion in the export market, and the weather of the past few years have also had an effect on the optimism of cattle prices.
“Here in southwest Missouri, we’ve had a few favorable years weather-wise, which has produced abundant forages. Forages are used extensively in beef cattle production, thus if you have the forage, folks figure cows or stocker steers and heifers are a sound investment. Certainly cattle appear to be better investments than alternatives if you like cattle, and utilize various risk management strategies,” Eldon stated.
Niche markets may also be helping fuel high cattle prices – but opinions on this vary from cattleman to cattleman.
“There are several niche market opportunities being explored across the country that may cause niche investors to be optimistic,” Eldon said. “In contrast, many conventional beef producers may point to technology that is reducing the cost of producing beef and those genetic, nutritional, health and forage innovations may have some effect on their optimism.”
Most cattlemen and women in 2015 seem to be very content with today’s high cattle prices and the market overall. Eldon said “In conclusion, the high price environment is a pleasant change from what cattlemen have had to contend with.