Look at the rest of what’s to come in 2021, a bullish outlook is still on the horizon though January presented some challenges.
But, as we painfully learned through 2020’s hardships, you never know when a bump along the way will come and completely change the market’s trajectory.
Regardless of what challenges the market may face throughout the next 11 months, cattle cycles usually run in 10-year periods, and it’s unlikely that the cowherd liquidation phase is over. With two of the biggest factors of cowherd growth and expansion being profitability and green grass, even though prices may be better in 2021, input costs inflicted by drought are sure to stress some producer’s bottom lines.
It seems a contradiction to put the terms “bullish 2021” and “liquidating cowherd” in the same paragraph, but as cattlemen, we must remember that the market has short-term and long-term tradeoffs. Unfortunately, the short-term forecast predicts that drought is on the horizon for much of 2021. High input costs, whether in hay or grass leases, can be a huge financial burden for operations and ultimately lead to cow liquidation. But looking at the market through a long-term perspective, fewer cows mean fewer calves, which means cattlemen can eventually demand higher prices.
The challenge when looking at reports like the USDA Cattle Inventory reports is keeping perspective. The reasons behind why cattlemen have to liquidate isn’t necessarily favorable now but could lead to great prosperity.
ShayLe Stewart can be reached at email@example.com
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