CATTLEFAX TRENDS
UNDERSTANDING THE CATTLE CYCLE The IBBA is proud to bring you the CattleFax Trends Publication. Look for this article each month in the Brangus Journal and Frontline Beef Producer. If you would like to learn more about CattleFax, please go to www.cattlefax.com. Price is a function of two variables – supply and demand. Predicting demand in the beef industry is no easy task. Although, one must assume demand will remain strong for the foreseeable future after its performance during the pandemic. There are several components that makes forecasting the supply side of the equation less challenging. Currently, most factors point to a smaller beef cowherd the next two to three years. Fluctuations in cow numbers is a key variable that creates cattle cycles and ultimately calf price trends. Historical data can provide some context regarding what to expect with the cowherd in the early stages of contraction. Profitability and/or grazing resources drive producers’ decisions about whether to expand or contract the cowherd. For example, margins were very tight for the cow-calf segment in the 1980s. After two consecutive years, 1981 and 1982, of being in the red, a steep downtrend in cow inventory began in earnest in 1983 and did not end until 1990. The last few years of that cycle were also fueled by very intense drought conditions. Financial losses during the mid-1990s caused the cowherd to peak in 1996 before contracting into the early 2000s. Record profits, up to that point, from 2004 to 2006 ended liquidation and numbers grew slightly. This was followed by declining profitability and severe drought early in the last decade that resulted in a beef cow inventory that dropped to the lowest levels in over 40 years. This allowed for the highest cattle prices in history and record profitability in 2014 and 2015. (continued on page 62)
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March 2021
