Peel Says Cattle Producers Making Tough Choices With Great Prices

Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel agrees with other economists that 2014 was an incredible year of profitability for all segments of the beef cattle business. At the recent Cattle Industry Convention in San Antonio, Texas, Dr. Peel said beef cow producers are seeing a lot of incentive with these high record prices to step up, hold back females and start that process of rebuilding their mamma cow herd to have more output over the next few years. Dr. Peel said it's going to take some time, but clearly the signals are there after multiple years of drought reduced to the nation's cowherd to historically small levels.

Over the last three years, Peel doesn't think producers have had a liquidation mindset. He think producers they have been ready to expand and were aware of how small the nation's cowherd was, but producers haven't been physically able to grow their herd. Peel believes there is a certain amount of pent up expansion and that's why there has been a rapid transition from liquidation to expansion.

"I think its pretty clear that producers intentions were somewhat different than what the reality was that they had to deal with," Peel said.

Producers are facing some difficult choices in deciding if they want to sell as many head now for those record prices or hold onto more females and rebuild their herd numbers. Peel said that question becomes even more challenging when you throw in the age-dynamic with the average cattle producer in their upper 50's.

"Older producers really have to make that decision for themselves on whether they are in for another go-round here or whether they are going to take advantage of this opportunity to get out and then implement that and that's really key," Peel said.