Presenter Information

Rick Rasby, University of Nebraska

Start Date

23-2-2008 12:00 AM

Description

The cow/calf enterprise has been a profitable enterprise over the last few years. Weaned calf prices have been unprecedented. It wasn’t that long ago that 500 pound calves sold for $60 per hundred-weight. For the last 4 years, 500 pound calves brought over $125 per hundred-weight. These high calf prices helped cow/calf producers reduce some debt and “heal-up” from times when the cow/calf enterprise was not very profitable. Estimated returns for a cow/calf enterprise reached a record $150/head in 2004 and remained over $100/head in 2005. Since then, returns have been under $50/head, with expectations for further declines in profitability. The cattle industry is a cyclic industry. The national beef cow herd inventory expands and contracts. When beef cow inventory is low, calf supply is low, and calf prices are high. When calf prices are high, beef cow inventory grows, causing an increase in feeder calf supply, consequently price of calves decreases. The cattle cycle has typically been about ten years. The current cycle began in 2004 following the longest cattle cycle in history (14 years due to a long liquidation phase). There appear to be a number of items currently impacting beef industry. Producers need to prepare and position themselves to take advantage of opportunities that present themselves that will have a positive impact on their cow/calf enterprise. Following are items that I think could potentially impact the cow/calf enterprise. Some of the items will pose challenges, but often with every challenge there is an opportunity that could enhance profit potential for the cow/calf enterprise.

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Feb 23rd, 12:00 AM

Opportunities and Challenges for Cow/Calf Producers

The cow/calf enterprise has been a profitable enterprise over the last few years. Weaned calf prices have been unprecedented. It wasn’t that long ago that 500 pound calves sold for $60 per hundred-weight. For the last 4 years, 500 pound calves brought over $125 per hundred-weight. These high calf prices helped cow/calf producers reduce some debt and “heal-up” from times when the cow/calf enterprise was not very profitable. Estimated returns for a cow/calf enterprise reached a record $150/head in 2004 and remained over $100/head in 2005. Since then, returns have been under $50/head, with expectations for further declines in profitability. The cattle industry is a cyclic industry. The national beef cow herd inventory expands and contracts. When beef cow inventory is low, calf supply is low, and calf prices are high. When calf prices are high, beef cow inventory grows, causing an increase in feeder calf supply, consequently price of calves decreases. The cattle cycle has typically been about ten years. The current cycle began in 2004 following the longest cattle cycle in history (14 years due to a long liquidation phase). There appear to be a number of items currently impacting beef industry. Producers need to prepare and position themselves to take advantage of opportunities that present themselves that will have a positive impact on their cow/calf enterprise. Following are items that I think could potentially impact the cow/calf enterprise. Some of the items will pose challenges, but often with every challenge there is an opportunity that could enhance profit potential for the cow/calf enterprise.