December 4, 2013

Beef cow herd to turn around?


It appears that the pieces are all in place to finally turn around the U.S. beef cow herd, according to a recent report from The Daily Livestock Report.  There are a number of important pieces but two are critical:

  • Strong calf prices.

imageIn the chart to the right, calf prices are bumping into record levels once again as stocker operations look to place cattle on wheat pasture and feedlots try to secure their share of the tight calf supply.

The supply of cattle outside of feedlots was estimated to be slightly larger last January 1 but much of that 0.6% increase was likely due to delayed placements due to high feed costs. A beef cow herd that was 2.9% smaller, yr/yr, on January 1 has almost certainly produced about that many fewer calves this year and ongoing heifer retention has tightened things even more. No wonder calf — and feeder — prices are this high.

  • Plentiful grass.

NOAA’s U.S. Drought Monitor map for November 26 shows only 13.8% of the U.S. having drought conditions rated as severe or worse. That compares to 34.7% one year ago and 35.2% on January 1, 2013. Just three months ago (late August), nearly 30% of the U.S. was in droughts rated as sever and worse. It is clear that some cow-calf areas (western Kansas, Nebraska, California) are still quite dry but much of the critical cow-calf country
from Texas northward through Missouri and eastward all the way to Florida are in pretty good shape. The Livestock Marketing Information Center reports that as of October 27, the date of USDA’s last crop and pasture conditions ratings for 2013, states with only 15.1% of the nation’s beef cow herd had 40% of their acres rated in either poor or very poor condition. One year ago that number was an astonishing 70.8%. States with nearly 48% of the nation’s beef cows had at least 40% of their acres rated in good or excellent conditions this year. That number was only 21% one year ago. Improved pasture conditions go hand in hand with lower grain and protein supplement costs to leave production
costs significantly lower than last year.

What cow-calf operators want to do from a economic standpoint and what Mother Nature allows them to do are frequently two different things — but not this year. A strong profit incentive and sufficient resources are driving beef herd expansion!

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