Texas ranchers are cautiously optimistic about the long-term profit potential for the beef industry. In a recent BEEF Magazine report, total revenue entering the rancher segment from the 2011 production year was estimated to surpass $33 billion.
Approximately 940,000 cows were sold out of Texas and Oklahoma last year alone due to drought. That lowered the nation’s cowherd below the 30-million-head mark at the end of 2011.
Higher feeder cattle prices have opened the door for cow-calf ranchers. Market optimism, along with better moisture patterns in much of the U.S., also is bolstering confidence.
Foreign demand for U.S. beef is a large driving force in domestic markets. Yet, changing economic factors are still a concern to some ranchers. U.S. consumer demand could slide as prices increase.
The report asks, “At what point do consumers begin to push back?”
Higher cattle prices also represent challenges for margin operators. Margin squeeze has been an enduring problem for feed yards. Margin operators face excess feeding capacity related to the diminishing supply of feeder cattle, which is driving feeder cattle prices ever higher.