Extension Agent: Beef business' future a bright spot in agriculture

By Peter J. McGuill
Dec. 24, 2013 at 6:24 a.m.

The second half of 2013 has been a roller coaster for agriculture. Grain crop prices have rolled down the hill to levels that have not been visited since 2008, while cattle producers are singing from the mountain top as a result of unexpectedly high market prices. The reason for this change is multi-layered; however, basic economic principles can be looked to as the primary reason.

Tightening cattle supplies throughout the U.S., as a result of the droughts of 2011 and 2012, caused deep culling in cow herds, and fewer replacement heifers were retained to rebuild the national herd.

It is estimated that the cattle numbers nationwide are down 15-20 percent from 15 years ago and down almost 2 percent from 2012. Fewer cow numbers result in fewer calves in the feedlot to supply a growing global demand.

Locally, these favorable market prices are appreciated. As one of the areas most affected by the ongoing drought, however, the ability to capitalize on this opportunity is significantly reduced.

Cattle numbers in Victoria and surrounding counties dipped by as much as 50 percent since 2009 because of a lack of grazing, and the increased value of replacement cattle has restricted the ability of most cattle producers to increase their herd size to take advantage of the current market price.

This occurrence is not restricted just to our area of Texas but is a national phenomenon. It is for this reason, among others, that the market forecast for beef is for prices to remain at a high level at least through 2014.

Some economists have predicted that the tight supplies of feeder cattle will last another two years before significant herd expansion occurs to allow the supply demand gap to narrow.

On the other side of the coin, grain production has continued to increase globally, causing a dip in the market value of these crops. Cotton remains steady, but corn and sorghum prices have fallen off pace since this time a year ago, but weather effects worldwide and global use increases could turn this trend upside down rapidly.

During this Christmas season, I wish each of you the very best wishes and hope you will take the opportunity to spend quality time with those special to you. I look forward to continuing to serve you in 2014.

Peter J. McGuill is the Victoria County extension agent - ag and natural resources. Contact him at 361-575-4581 or pjmguill@ag.tamu.edu.



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