When forage is insufficient and costs are high, ranchers are forced to sell off their cattle to reduce the size of the herds. The process of rebuilding those cattle herds will be slow, especially in light of higher input costs.
That’s what AI says, now here is a real answer:
When there is a severe drought and a rancher is forced to sell his prime breeding aged cows, they aren’t getting sold to a kill plant to make ground beef. If they were, then ground beef would be dirt cheap out of sheer abundance.
Instead, they are purchased by ranchers in other areas that do have grass and feed so they can grow their herds. Thus, they just get moved to another place and carry on reproducing there. Sure, some of the older ones might end up in your Chalupa or Baconator during one of these fire sales, but not an amount that really moves the needle.
If AI consulted an actual rancher when queried, it might know these things. Unfortunately it just scrapes articles from mainstream media journalists who don’t know bull shit from shinola.
The inventory is low because the price is high, and the price is high because the inventory is low. It’s a vicious circle. Reason being that rebuilding the cattle herd is a long process when you only get one calf per cow per year and it takes 18 months for the first calf that cow has to make it to market.
Building the herd requires ranchers to keep their heifer calves back and play a multi year long game versus taking the short term money. Do you sell the heifer calf to a feedlot now at a historic premium and put the money in your pocket, or do you put the heifer calf back in the herd to have a calf 18 months to 2 years from now and then sell that calf as a feeder 6-7 months later (or as a fat 18 months later?)
It’s hard not to see why the herd is shrinking rather than expanding.
Chicken and pork producers use mostly the same inputs, equipment, capital with high interest, etc, so why aren’t tariffs and all these other things making them more expensive? Because hog and chicken farmers can build herds exponentially faster than cattle. A sow has 8-10 pigs and can do so twice a year if needed. Chickens lay eggs almost every day.
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