There has been a lot of expansion talk this fall, Anderson says, “But it’s really hard to look at market reports and see what’s going on with replacement heifers. There has been some interest in heifers, and a lot of interest in replacements. With lower feed prices reducing the carrying cost of holding heifers, we do definitely see definitely that cow slaughter has slowed. That may partly be that there’s just not many left to draw from.

“But, if we look at cow slaughter numbers for the first half of this year, particularly the second quarter, we were slaughtering cows at about the same rate as 2009-2011 — and that’s pretty remarkable considering how fewer cows we have in places like Texas and Oklahoma than we had back in that period.

“That’s a pretty aggressive rate of culling early in the year. But it has dropped off dramatically since the middle of the year, and now we’re running as much as 12 percent to 14 percent lower than a year ago in terms of cow slaughter.

MORE: Sayonara to cows and chickens?

“We really do seem to have slammed on the brakes for culling cows. Those cattle that are in the breeding herd now, it looks like producers are trying to hold them together as much as they can, which suggests there’s probably interest in keeping heifers.

“The big placement number last month gives me a l bit of pause. A lot of those would have to be heifers that might otherwise have gone for replacements. But on balance, I’d have to say interest has shifted toward expansion.”

However, it’s going to be a slow process this time, Anderson says, “just because of the numbers we have. We’ve got high prices and we want to keep as much production as we can. Balancing that with interest in expansion, I think we’re going to see slow expansion as we go through this cycle.”

He says, “I’m a little surprised, with the big drop-off in slaughter, that prices have basically been steady, with a little pop in September. That’s much better than a year ago, but I would have thought we’d see a bit more improvement in slaughter cow prices to try entice a few more to come to market. These are some really big year-over-year drops in cow slaughter.

“If we look at prices across the sector, they’re very good historically. We’re basically now at close, or at record price levels, for fed cattle: in the low $130s, a level we’ve never held on to before. It’s a strong market, with most of the support coming from the supply side — a really tight supply situation.”

Boxed beef cutout value has helped some in the last few weeks,” Anderson says. “We’re knocking around $200 per hundredweight on the wholesale choice cutout value. If we’re going to get much over the low $130s, where we are now in the fed cattle market, I think this cutout value has got to run up some more, at least to the highs we saw earlier in the year.

“So far, it hasn’t been able to do that, and I think that’s becoming a limiting factor on fed cattle prices — a lot of buyers are saying if we’re going to sustain these values, we’ve got to see a higher wholesale price. To this point we’ve bounced around the $200 mark and haven’t been able to push beyond that.

“For producers to start feeling better about taking another step up in what they’re paying for cattle, I think we’re going to have to see prices go back where we were earlier this summer, to the $210-212 range in the wholesale beef market. But, I think it’s going to be hard to get back there, mainly because of competing meats — pork and poultry.”