What You Can Pay For A Cow

[ALLFARMER]

Good point Burnt about capital costs.

With all the input financing grain guys do higher
interest rates may affect them more than the
cattle guy.

[farmers_son]

Got this from the FCC newsletter.

Beef producers encouraged to expand
by Ron Friesen
Now is a good time for beef cattle producers to expand their herds because the North American market is ready for it, says a leading U.S. livestock economist.

Tight cattle supplies and increasing foreign demand for beef will create market opportunities for producers in the near future, says Jim Robb, a director with the Colorado-based Livestock Marketing Information Centre.

"The market is sending a signal to producers to expand over the next five years," Robb said at a recent provincial grasslands seminar in Winnipeg.

Tighter supplies are largely the result of a crippling drought in the southern United States which has reduced American cattle numbers significantly, says Robb.

According to the United States Department of Agriculture, the number of cattle and calves as of July 1, 2011 was 1.1 per cent below 2010 levels. Robb predicted a further two per cent decline by Jan. 1, 2012.

The U.S. beef cow herd has been decreasing steadily for the past five years.

Meanwhile, world demand for meat, including beef, continues to grow. Robb says economists predict the global demand for animal protein will double by 2050.

"We’re going to see a very strong increase in demand coming from overseas, both from growing populations and from growing incomes in other countries."

Since the U.S. will not be able to meet growing overseas beef demand because of its shrinking cow herd, Canada is well positioned to take advantage of increased export opportunities, Robb says.

Canada’s beef cattle numbers have bottomed out after dropping for years and are finally starting to recover, statistics show.

But in the U.S., herd rationalization continues. Robb says cow-calf producers in the U.S. Midwest are leaving the industry in record numbers because they find it more lucrative to grow cash crops such as corn and soybeans. Similarly, in the southeastern U.S., cattle producers are turning to peanuts and cotton.

The exodus of producers and the lingering effects of the drought have combined to produce record beef prices, both at the farm and retail levels, Robb says.

That trend is likely to continue in the year ahead, he adds.

Calf, yearling and fed cattle prices are all expected to be higher in 2012. Robb says U.S. cow-calf returns should exceed the record set in 2005.

However, strong cattle prices are tempered by even stronger prices for feed grains, driven partly by U.S. legislated requirements for ethanol production, he says.