Cattle Inventory Swing

This is Tim Hammerich of the Ag Information Network with your Farm of the Future Report.

USDA released a bearish Cattle on Feed report in October, showing cattle on feed at 11.5 million head, the second-highest figure on record. Bernt Nelson, American Farm Bureau Federation Economist, explains what this means for cattle markets going forward.

Nelson… “We have a lot of cattle that are being placed on feed, and a very high percentage—near 40 percent of those cattle are still heifers. During the short run, this means that we're going to have a very high supply of cattle come in the market at one point in time, but in the long run this takes a lot of cattle out of the market that could have otherwise been held back for replacements.”

Replacements are what help rebuild herds following a dip in herd size.

Nelson… “Replacement heifers are basically the planting intentions of the cattle business. So, when we have less of those replacement heifers being held back to produce calves, we ultimately have a smaller inventory. We've been going through this for a couple of years now, but now as this happens, we're looking at 2024 at the earliest before we can even consider starting to replace this cattle herd.”

Nelson said consumers will likely feel the pinch of higher beef prices next year, adding that inflation is going to influence the ability of the economy to sustain these high beef prices or if consumers will start switching over to other substitutes like pork and chicken.

Learn more on the Market Intel page at www.fb.org.