Several years of drought, low cattle prices, and record-setting input and supply costs have led to a shrinking cattle herd, which, paired with strong consumer demand for beef, has pushed prices for beef and cattle to record levels.
Cattle farmers and ranchers are operating in the black for the first time in a long time, but margins are vulnerable and could be wiped out should prices begin to fall. Market intervention efforts, including increased imports, would add another barrier to growing the cattle herd and potentially incentivize more contraction in the cattle inventory. This could drive beef prices even higher and increase U.S. reliance on imported beef to meet domestic demand.
Right now, positive economic returns could provide farmers and ranchers incentives to rebuild the cattle herd. But if prices continue to decrease and returns disappear, the cattle herd could continue contraction which would increase beef prices even more and increase U.S. reliance on imported beef to meet domestic demand.
Source: Bernt Nelson - American Farm Bureau Federation… Read Complete Article
