Cattle Cycle

The cattle cycle refers to cyclical increases and decreases in the cattle herd over time, which arises because biological constraints prevent producers from instantly responding to price. In general, the cattle cycle is determined by the combined effects of cattle prices, the time needed to breed, birth, and raise cattle to market weight, and climatic conditions. If prices are expected to be high, producers slowly build up their herd size; if prices are expected to be low, producers draw down their herds. The cattle cycle averages 8-12 years in duration, the longest of all meat animals, but the effects of persistent dry conditions on pastures and harvested forage supplies can lead to shortened or extended cycles.
Dry conditions that began in 1996 and persisted from 1998 through 2003 held down the retention of heifers until forage conditions improved. By late 2003 and 2004, grazing conditions had improved and ended a 9-year cyclical liquidation of cattle inventories. This, together with strong feeder calf prices, began the process of herd expansion through the addition of heifers and calves. The expansion lasted until 2007; then inventories began declining because of increasing feed and energy prices. The National Agricultural Statistics Service (NASS) provides information on cattle numbers in semi-annual inventory reports.