Economics in action: Texas Cattle Prices Will Continue to Increase

Dwight Steward wrote:

Cattle prices in Texas will continue to go up.  There are several factors that point to a continued increase in prices.

1. The overall number of cattle in Texas has fallen.  From 2012 to 2013, the total number of cattle on feed decreased by over 600,000 from 11.9 M to 11.3M which is a 5% reduction.  As with anything, the fewer that you have the more that they will cost.

2. The number of breeding cows has decreased even more.  From 2012-13, the number of breeding cows decreased 12%, from 4.57M to 4.02M.  The smaller number of breeding cows in Texas means that there will be fewer calves born in subsequent years which absent significant imports of cattle into the state, means that there will be smaller herds into the indefinite future for Texas.

3. The Fracking Boom.  The fracking boom has made cattle ranching relatively more expensive in certain areas of the state.  In some areas, such as South Texas, cattle ranchers have found that it is more profitable to sell or lease their land for oil and/or gas exploration.

See the cattle price data here;

https://docs.google.com/spreadsheets/d/15jia1S9wv7BVUzGngeHoX-Ac6ERhCWTrzqIj2GUR4dA/edit?usp=sharing

by Dwight Steward