Cattle Prices Continue Drive Upward
He’s only 28 years old, but Lowndes County cattleman Randall Pringle said he’s never seen cattle prices so good. History shows he’s right.
Cattle herds across the U.S. have declined as back-to-back droughts in the South were followed by droughts in the Midwest. Corn prices skyrocketed. Hay was in short supply. Many farmers were forced to liquidate their herds.
But for those like Pringle, who managed to hold on, the rewards are rolling in.
“You can really make money just selling calves right off their mamas,” said Pringle, who owns 300 head of brood cows with his uncle, L.R. Pringle. “When you’ve got weaned calves bringing the same thing 600-pound stocker calves were bringing a couple years ago, it doesn’t make sense to me to hold them.”
Heifers are an exception to that line of thinking, Pringle said., adding he’s keeping some to expand his herd.
“It’s hard for me to think about how much money they’d bring,” he said of the young cows. “But I’m looking at them as a long-term investment. Prices are going to be good for a while, I think.”
Most Alabama cattle farms are like Pringle’s. Referred to as “cow-calf operations,” calves are sold at weaning, mostly through public auction.
Alabama Farmers Federation Beef Director Nate Jaeger predicts lower feed costs and relief from several years of drought will fuel expansion of herds.
“Cow-calf farmers as well as stockers (farmers who raise mid-weight calves) should enjoy high prices in 2014,” Jaeger said. “This will be due to even smaller supplies of feeder calves and lower feed costs. Availability of feeder calves (those weighing about 750 pounds) will remain tight, as heifer retention in 2014 continues to climb.”
The only lingering question on the minds of some cattle analysts is whether consumer demand will erode as higher beef prices hit grocery stores. Jaeger said exports in 2014 should continue to be bullish for beef, with the biggest market being the Greater China region.
The Jan. 1, 2013, inventory of beef cows was the lowest in 60 years, and numbers are expected to be even lower in the annual report due out in late January. If the trend continues, it would be the eighth consecutive year of declining cow numbers, resulting in fewer feeder cattle and calves next year.
Five years ago, USDA reported fed cattle weighing 1,200 pounds averaged 93 cents a pound; calves averaging 550 pounds typically bought $1.15 per pound. Feeder steers weighing 750 pounds averaged $1.02.
Last year, fed cattle averaged $1.26 per pound, calves were $1.67, and feeders averaged $1.48, according to CattleFax, a marketing information service for the beef cattle industry. Some analysts are predicting prices will set new records this year as well.
Pringle said he hopes they’re right.
“Prices may level out in five or six years as people return to the cattle business and begin to grow their herds,” he said. “But even then, I think it will be good. I’m sure going to enjoy it while I can. I’m lucky we were already in the cattle business, although it was tough making it through the drought. It’d be mighty expensive to get in the cow business right now.”