SPRING HILL, Tenn. – Prices at an elevated level for a longer time have been encouraging cow-calf producers to invest more in herd expansion, according to Andrew P. Griffith, University of Tennessee professor of agricultural and resource economics.

“They can simply make more informed decisions that result in the anticipated payoff,” Griffith told Farm World. “Thus, a slower expansion of the breeding herd will not push a glut of cattle into feedlots in two years, but it will slowly increase the number of cattle going on feed. This will slowly increase beef production.

“Furthermore, a slower increase in beef production should keep cattle prices elevated longer,” he added. “It is very much an intertwined cycle.”

When asked what some of the feeder cattle price challenges have been, and what the trends are he has seen in the past and present, he said, “The general economy is certainly weighing on beef prices and thus, cattle down the production line. Some of this is realized pressure in the economy, and the other is based on expectations. Both realized information and expectations influence the futures market, which feeds into the cash market to some degree.”

He said another challenge for feeder cattle prices has been a constant flow of feeder cattle and calves.

“Most analysts would have said there should be fewer animals coming to market, and there probably will be at some point,” he said. “However, heifers have continued to funnel into the cattle feeding system as opposed to being retained for the breeding herd. Fall movement of spring-born heifers will be a better indicator of what producers are doing on the heifer retention front.

“Regions with good moisture and forage conditions will retain females, and regions with poor moisture and forage conditions will not be able to do so,” he added. “When heifers begin to be retained for breeding, that is when we will see more competition for feeder cattle. We will also continue to see cattle staying on feed longer, which is already part of the equation.”

He said in his Aug. 16 University of Tennessee livestock commentary, “Pressure on feeder cattle futures continues to hamper cash prices at local auction markets, and the hope of a wild and untamed run to higher prices seems highly unlikely at this stage in the game.

“As has been mentioned several times, steady prices at an elevated level would be good for producers as it will extend cattle herd expansion over a longer period, and thus, result in strong prices being experienced for a longer period,” he said.

“This is not a popular idea among the masses as most people want all they can get today, and they will worry about tomorrow when it gets here,” he added. “This is not a suggestion to worry about tomorrow, but it is a suggestion to plan for tomorrow.”

He said, “The hope would be for producers to still be in business the next several years, which means many folks will be in the business long enough to see prices decline again before increasing at a point further down the road.

“With that said, the market is approaching the season when the spring-born calf crop is weaned and brought to market,” he said. “One should expect freshly weaned calf prices to seasonally decline moving through September and October, and potentially into November. Lower prices this fall may not persist as long as in years past, due to fewer cattle making their way to town, and due to drought conditions forcing calves off pasture earlier than normal.”

He said, “Drought is not negatively impacting all regions of the country, but it has influenced Tennessee, and many surrounding regions.

“Thus, producers in drought regions may wean and move calves earlier than is typical,” he said. “This will put the pressure on buyers to purchase when cattle are available because the pipeline may be far from full by December.”