Information Possibly Outdated
The information presented on this page was originally released on September 15, 1997. It may not be outdated, but please search our site for more current information. If you plan to quote or reference this information in a publication, please check with the Extension specialist or author before proceeding.
Cattlemen Struggle To Interpret Market
By Amy Woolfolk
MISSISSIPPI STATE -- Cattle producers struggle to interpret confusing market signals and maintain an efficient farms. Better communication between industry segments could reduce some of the confusion.
Dr. Charlie Forrest, extension marketing specialist at Mississippi State University, said market efficiency in the beef industry has fallen behind other industries.
Beef producers, buyers, feedlot operators and packers often work independently, but more cooperation between them could bring more helpful market information. Forrest said the ability to use this information and make wise decisions will then lead to more efficient cattle farms.
Forrest suggested closer relationships and more helpful information from the different segments of the industry as possible changes.
"More coordination between the segments could help make beef more competitive in the overall meat industry," he said.
In the past, the beef market has cycled every eight to 14 years. It begins with an increase in the number of cattle available for the market. The large number of cattle drives prices down.
In turn, low prices cause a decrease in the number of cattle available for market. Reduced supplies then drive prices up and encourage producers to build numbers again, beginning a new cycle.
After low prices from 1994 to 1996, cattle numbers have decreased in 1997 and prices have rebounded. Forrest said he anticipates herds will begin to rebuild in 1998.
The economist said the last few cycles of the beef market have indicated that the market may be "leveling off."
"The total number of cattle is changing less from times of high prices to times of low prices," Forrest said. "The degree of change in prices may become less dramatic in future cycles."
Even though market swings appear to be less severe, cattle producers continue to deal with the unpredictability of the market. Producers can only take the signals the market gives and try to act in their own best interest.
"Cattle producers will always have to struggle with the lag between the time a decision is made to sell an animal and the actual time the animal is ready for market, whether or not the industry ever changes structurally," Forrest said.