Source: Rabobank
One of the few bright spots in production agriculture right now is livestock with beef herd contraction and high demand combining to keep farm gate receipts steady for cattle ranchers. But how long will it last? Lane Zimmerman is a senior beef analyst with Rabobank and says he does see a change in production moving forward.
“We brought a lot of profitability back to farms and ranches, and now what you’re going to see is fewer of those mature cows on farms and ranches being sent off to the beef production side of the production equation, and instead, they’re going to be asked to be productive herd contributors to newborn calves that will contribute to beef production going forward. The challenge is, as they have those calves, if they’re a heifer calf, there’s an increasing likelihood that that heifer can stay on the ranch going forward to facilitate new herd growth.”
That being said, Zimmerman predicts price supports to remain in place through the end of the decade.
“We make that transition to 2029 and through the rest of the decade and into the early 2030s, beef production and domestic cattle slaughter is going to increase as that herd rebuilds. It’s going to keep a very steady support level under these ground beef prices going forward, as we continue to realize tighter cattle supply going forward.”
Added to that, he continues to see strong demand on the consumer side.
“And I’m here to tell you, as we look at early 2025 all indications are demand is going to continue to set new near-term record highs, looking like the best demand we’ve seen since 1986 at the moment. And a lot of that’s due to the fact that even though the consumer pricing is going up, and even though the consumer’s increasingly stressed, buying beef at retail is still a relatively cheap lifestyle upgrade that the consumer can make.”
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