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Apprehension could add to slow-down of herd expansion

A farm lender says apprehension over continued volatility in the cattle market could trigger a halt in expansion sooner rather than later.

Pat Shields with Texas based Capital Farm Credit says cattle producers are realizing prices might not make it back to the record highs the feeder cattle and replacement cow sectors experienced just a few years ago.  “After those great big rises in prices,” he says.  “The next two years there was a great decline.  They remember the decline – they forget how much those cattle brought.  Now they’re looking at prices $500 less than what they sold them for when the prices were rising.”

Even-so, market analysts say that while expansion has slowed – it isn’t over, yet.

Shields says lower prices have producers feeling the pinch from some of the higher-dollar replacement heifers they purchased during the peak of expansion.  “Their major concern right now is looking if they didn’t retain enough money out of the high-dollar calves as they were replacing these cows,” he says.  “They had them financed over 4 to 5 years because cows were at an all-time high.”

But, he tells Brownfield – that is changing.  Shields says that could be good news for producers in position to expand.  “We could see a drop or a dip in the value or the cost of some of these replacement females,” he says.  “Cheaper breeding cows allows for quicker equity return as they’re selling calves the next 4-5 years out of those replacement cows.”

Shields spoke to Brownfield at the recent NCBA Cattle Industry Convention in Nashville.

AUDIO: Pat Shields, Capital Farm Credit