March 18, 2005 | By: Laura Skillman
PRINCETON, Ky.

After eight years of cattle herd reductions, 2005 brings with it the whispers of expansion. Expansion marks the end of the longest cattle cycle in history but it should not mean the end of strong prices.

The previous cattle cycle began in 1990 and officially ended in 2004. Increasing cow numbers and replacement heifers expected to calve in 2005 suggest that last year might have been the last year-to-year decrease in the calf crop that will be seen for a while, said Kenny Burdine, livestock marketing Extension associate with the University of Kentucky College of Agriculture. The cycle is a multiyear pattern of swings in cattle numbers that generally is tracked from low point to low point.

This suggests that the United States is entering the expansion phase of a new cattle cycle. Unlike most past cattle cycles, this one begins the expansion stage with continued strong demand for beef. The last time cattle entered the expansion phase with increasing beef demand was in the 1960s. Beef demand is estimated to be up 15 to 20 percent since 1998.

Retail prices set a record high this past year and that means prices are signaling more beef is needed on the market, Burdine said. Beef producers are starting to respond, and expectations are that the cattle industry will have a steady expansion phase for the next few years. Producers are not expanding quickly, based on heifers held for replacements.

Slow, controlled expansion means smaller price swings from year to year once increased numbers of calves hit the market. In the 1960s and 1970s, cattle prices underwent dramatic fluctuations due to rapid expansion, he said.

Kentucky’s beef producers began adding to their herds in 2002 and 2003. Although during 2004 numbers for beef cattle in Kentucky showed a slight drop, that could simply be the result of when the data was collected, Burdine noted. The number of heifers held for replacement in the state was up 6 percent in the January USDA report.

“So, it is likely Kentucky is still expanding its cattle herd,” he said.

The next U.S. Department of Agriculture cattle estimates will be released in July, and Burdine said that report should give another indication of how quickly herd expansion is taking place across the country.

With slow expansion only in the early stages, prices for feeder cattle should remain strong. Pulling heifers out to expand the herd will help support prices in the short term because it limits the number of calves heading to market. Also, it takes time for heifers to be developed, bred and to produce marketable calves.

The next few years should continue to be good ones for cow-calf producers, Burdine said.

Contact: 

Writer: Laura Skillman 270-365-7541 ext. 278

Contacts: Kenny Burdine 859-257-7272, ext. 229