Cattle Economics

Expansion Signals Grow

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Using data from the Livestock Marketing Information Center (LMIC), Tonsor explained the average return over cash cost was estimated at $80/cow in 2012. It is estimated to reach $150/cow in 2013 and 2014, expected to be the peak return years until the next cyclical liquidation.

Though cow-calf producers are not yet in expansion mode, generally speaking, Glynn Tonsor, Kansas State University agricultural economist, says the first signal of them leaning that direction came in the Jan. 1 Cattle Inventory report, which indicated a 1.4% year-to-year increase in the number of beef replacement heifers.

Tonsor cautions that the higher number needs to be considered relative to the previous year’s number that was downright paltry in historic terms.

During this week’s inaugural Beef-Cattle Economic Webinar, which was co-hosted by BEEF magazine, Tonsor said projected historically high returns per cow over cash costs will likely be enough to entice some producers to begin expanding.

Using data from the Livestock Marketing Information Center (LMIC), Tonsor explained the average return over cash cost was estimated at $80/cow in 2012. It is estimated to reach $150/cow in 2013 and 2014, expected to be the peak return years until the next cyclical liquidation.

Incidentally, citing Texas Animal Health Commission out-shipment data – the number of animals receiving veterinary inspection certificates prior to interstate movement – David Anderson, AgriLife Extension livestock marketing economist, said last week that more than 150,000 cows left Texas last year, about three times more than in 2010.

The largest destination states for Texas breeding cattle were New Mexico, Nebraska, Florida, South Dakota and Kansas.

According to the most recent cattle inventory report, Texas began 2012 with 660,000 fewer beef cows than on Jan. 1, 2011.

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Wes Ishmael provides tightly focused analysis and commentary on specific beef quality and marketing issues of practical importance to beef producers.

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Wes Ishmael

Among the industry’s most insightful thinkers, Wes Ishmael concentrates on industry price and market perspectives for BEEF magazine. Along with his monthly “Cattle Economics” column...

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