Planning from the cattle cycle’s front end

 Notwithstanding the recent and brutal price slide stemming from a market front-loaded with over-fed cattle, Petry explains, “A number of headwinds have developed in 2015 that could cause cattle prices to decline cyclically for the next several years.”

A Handbook for Ranch ManagersWhat is that thing about some fat girl singing?

by in BEEF Editors’ Blog

Has the regular, traditional cattle cycle of old returned?

The cattle cycle is dead. Long live the cattle cycle.

Planned Grazing: A Study Guide and Reference Manual “For many years, cattle producers experienced a somewhat predictable cattle cycle approximately 10 years in length,” says Tim Petry, Extension livestock economist at North Dakota State University. “However, during the last 15 years, an abnormal number of outside events have caused the cycle to be less predictable and left producers wondering if the cattle cycle is relevant for planning purposes. The likely answer to that is yes, with particular emphasis on the next several years.”

Environmental & Natural Resource Economics: The Austrian ViewIn fact, it’s been easy to ignore the cycle, given the seemingly endless liquidation phase of the recent one (2004-2014) and the flea-flat nature of the past couple.

So far, though, the early end of this new cattle cycle appears to be aggressive.

Combat Shooter's Handbook Reconnaissance Marine MCI 03.32f: Marine Corps Institute The Betrayed: On Warriors, Cowboys and Other MisfitsGlynn Tonsor, agricultural economist at Kansas State University (KSU) explained at the recent KSU Beef Stocker Field Day that along with 1992, heifers retained for breeding, as a percentage of the breeding herd July 1, this year and last were the most since 1974.

The Essence of Liberty: Volume I: Liberty and History: The Rise and Fall of the Noble Experiment with Constitutionally Limited Government (Liberty and ... Limited Government) (Volume 1)  The Essence of Liberty: Volume II: The Economics of Liberty (Volume 2) The Essence of Liberty: Volume III: A Universal Philosophy of Political Economy (Liberty: A Universal Political Ethic) (Volume 3)“History says when we expand the herd, we tend to do it for three to five years before we hit the peak of the cycle and start coming back down,” Tonsor explains.

“Prices for all market classes of cattle were record-high in 2014 and likely reached the cyclical high for this cattle cycle,” says Petry in his recent Spotlight on Economics: The Cattle Cycle Revisited. “Prices were bolstered by the historical short cattle and beef supply, coupled with beef herd building that caused more heifers to be kept for breeding purposes, and the low beef cow harvest. Furthermore, lower-than-expected pork and chicken production and strong export demand for beef and byproducts aided the record high cyclical peak in prices.”

Notwithstanding the recent and brutal price slide stemming from a market front-loaded with over-fed cattle, Petry explains, “A number of headwinds have developed in 2015 that could cause cattle prices to decline cyclically for the next several years.”

One factor is the expectation for increased beef production in tandem with the record total red meat and chicken production forecast by USDA for this year and next.

“Another key driver behind calf and yearling prices in recent years has been declining feed costs, a trend that largely has run its course,” Petry says. “Generally good moisture conditions should cause continued herd rebuilding but also will be the wild card for how much and where the herd will increase.”

With the cycle in mind, Petry points out, “During the increasing phase of the cattle price cycle, pre-pricing tools in risk management strategies for cattle to be sold in the future may be less effective. That has been the case the last several years, especially for producers selling calves and yearlings.

“But during the decreasing phase of the price cycle, those strategies tend to work better. Of course, seasonal price patterns are very important in developing marketing plans. And the worldwide market environment that the entire livestock industry now operates in likely will continue to cause more price volatility than in past cycles.”

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Planned Grazing: A Study Guide and Reference ManualPlanned Grazing: A Study Guide and Reference Manual. This is the ideal squeal to A Handbook for Ranch Managers.  Although the ecological principles remain the same, what was originally known as “The Savory Grazing Method” now answers to a multitude of different names: ranching for profit, holistic management, managed grazing, mob grazing, management intensive grazing, etc. Land & Livestock International, Inc. uses “Restoration Grazing” under its “Managing the Ranch as a Business” program.” No mater what you call it, this summary and synopsis will guide you step by step through the process and teach you how to use it as it was originally intended. No more excuses for failing to complete your grazing plans.

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About Land & Livestock Interntional, Inc.

Land and Livestock International, Inc. is a leading agribusiness management firm providing a complete line of services to the range livestock industry. We believe that private property is the foundation of America. Private property and free markets go hand in hand—without property there is no freedom. We also believe that free markets, not government intervention, hold the key to natural resource conservation and environmental preservation. No government bureaucrat can (or will) understand and treat the land with as much respect as its owner. The bureaucrat simply does not have the same motives as does the owner of a capital interest in the property. Our specialty is the working livestock ranch simply because there are so many very good reasons for owning such a property. We provide educational, management and consulting services with a focus on ecologically and financially sustainable land management that will enhance natural processes (water and mineral cycles, energy flow and community dynamics) while enhancing profits and steadily building wealth.
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