Accumulation phase has begun for cattle

The cycle for the beef cattle sector has turned north and the accumulation phase has begun, say economists.

The cattle cycle has turned north and the accumulation phase has started, according to Rob Murphy, senior vice president, Informa Economics at that group’s Commodity and Feed Ingredient Outlook Symposium in Bloomington, Minn.

Murphy noted that producers seem to be building herds more aggressively than previously expected and that is translating into a tight fed cattle supplies, a situation that will last probably for at least another year. By next fall, larger calf numbers will become evident, he said.

Cattle feeders and packers will both remain challenged financially until numbers expand further, Murphy said.

International demand holds the key to pricing in the cattle and beef sectors, and a surprise in either direction would likely have a significant impact on domestic prices, he said.

An important wildcard, Murphy said, is El Nino’s impact on weather in the cattle feeding regions this winter. “Weather markets are certainly a possibility this coming winter,” he said.

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