The new year brings continued questions about possible U.S. beef herd expansion. Scott Varilek of KKV Trading says it’s tough to hold back heifers to begin that expansion when those heifers bring good money to the operation.
“That’s the other side. You feel like this is my year to capitalize and to cash in, and for a lot of our older-generation ranchers, it’s absolutely that. We have such a labor shortage, challenges of our own, and higher input costs, so it makes it a little bit easier just to load a few extra on the truck. Rather than say, ‘I’m going to keep a few extras back,’ it’s a lot easier to send them on along the way, and I think that’s why we’re at all-time highs.”
It’s not financially worth it right now for producers to begin expanding their herds.
“We haven’t had enough of the dollars trickling down to the cow-calf guys. So, the market had to say, ‘This is why we’re at high prices because we’re unable to do it for this price,’ and the market’s kind of fixing itself. So, it’s just very frustrating that we have the beef market that we have, that we have to raise fewer numbers to get the market to rally. That’s all that we have, the leverage that the packer has with all the formula cattle, and I think this is your aftereffects of what’s happening from all of that.”
It appeared that the herd had finally begun a rebuild in October.
“I thought that we were too. There was a little bit of a timeframe where it was going to happen, and a big five-to-six-week rally pulled it off. And then we have to note, as well, that it’s starting to dry out in some cow-calf country in the North. We’ll decide on the South and how much rain that looks like. They had a little bit of a boost of moisture there this fall, but if we start to dry out, that could be the next thing that’s going to curve it and pull it back in again.”