Spurred by record-high cattle prices in 2014 and early 2015, U.S. ranchers are expanding their herds with plans to send more cattle to slaughter in coming months. The USDA says the number of calves is up 3 percent from a year ago and the number of beef cows is up 4 percent.
Purdue economist Chris Hurt says the upturn in cattle numbers is likely to begin to level off in 2017. Traditionally, the beef cattle expansion cycle runs five to six years. “However, history is not likely to be a very good guide on this cycle,” writes Hurt at farmdoc daily. “My best guess is that U.S. cow numbers will continue to rise for only one or two more years, making this a relatively short expansion phase of three or four years.”
In Hurt’s view, the expansion has been larger and more rapid than usual, and the profit outlook already is less attractive. Beef output is forecast to rise 4 percent this year, with the strong dollar likely to constrain exports, putting more beef on the domestic market and pressuring cattle prices. The futures market is pointing to an average price of $125 per 100 pounds for slaughter cattle, compared to $148 last year.