The U.S. has seen a drastic decline in cattle numbers, but how far can the industry go? Most ranchers were forced to reduce their herd numbers in recent years due to the severe drought that drastically effected the Southern Great Plains and to a lesser extent the Midwest. This pushed nation cattle herd to the smallest numbers in more than 60 years. Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel said the numbers had gotten so small the U.S. was at a critical tipping point.
"I think so, I think we were forced to get smaller than we intended to," Peel said. "I think it probably did have some impacts on market share, if you will. Now I am not as worried about that as some folks. I think we will get market share back. Beef is very competitive on a value basis, if not on a price basis. I think we saw that this last year."
In 2014, there were concerns how demand would play out in having record cattle prices. Peel said most of the concerns come from the fact that the industry had been to these levels before.
"The bottomline is, I think beef still has value to a strong consumer segment," Peel said. "As supplies rationed that out, those folks that really do value beef have stepped up and they are willing to pay whatever it takes. So, I think were in ok shape with that and I think we will recover market share as we rebuild supplies in this industry."
One of the reasons cattle prices were as strong as they were in 2014 was because of the strong demand from consumers domestically and internationally. Peel said every indication shows demand did strengthen in 2014.
"I think we probably undersold our demand strength to some extent in this industry," Peel said. "We probably need to give it a little more credit and be a little more assured as we go forward that the demand is there."
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