Cattle producers poised to rebuild herds
Markets and feedlot numbers are confirming analysts’ prognoses that producers again intend to beef up the beef herd.
Similar efforts to retain heifers the past two years were thwarted by severe drought in the Southern Plain in 2011 and more widespread drought in 2012. But if conditions hold up this spring, the herd rebuilding that is starting now could take, said Derrell Peel, livestock economist with Oklahoma State University.
USDA’s delayed October cattle on feed report released Oct. 31 shows heifers on feedlots with 1,000 head capacity or more on Oct. 1 were down 8 percent from Oct. 1 of 2012. Heifers in feedlots have been down all year compared with 2012, but they were only down 3.5 percent in mid summer, Peel said.
Heifer and heifer calves on feed on Oct. 1 numbered 3.66 million, down 305,000 from Oct. 1, 2012, and down 117,000 from July 1.
The significant reduction in heifers on feed on Oct. 1 indicates the industry is retaining heifers, Peel said.
Producers’ efforts to retain heifers last fall fell apart in the spring due to lack of hay from the continued drought, a long, cold winter and late spring. Heifer placements into feedlots last April and May were up on a year-to-year basis, he said.
Heifer slaughter should start dropping in the next couple of weeks and should decrease the rest of the year, he said.
Heifer slaughter in September was up 28,000 head from September 2012 but down 65,000 head from August, according to the USDA-NASS slaughter report, also released on Nov. 1.
Producers appear once again to be retaining heifers and with cow-calf producers on track to have the best margins on record next year, they will try to carry as many cows over the winter as they possibly can, said Steve Meyer and Len Steiner in their Nov. 1 Daily Livestock Report.
“This industry has been ready to expand for about three years,” Peel said.
Drought postponed earlier attempts, and expansion is still vulnerable to drought. But if conditions are good next spring, producers will be very aggressive in their efforts to rebuild the herd, he said.
The economics are there. Corn prices have dropped $2.75 since mid-summer, calf prices are significantly higher, as is cow-calf producers’ profitability. Those positives are showing up at cattle auctions, with prices for replacement heifers very high – in some cases higher than steers at the same weight, he said.
The industry is seeing heifer retention now, but if soil moisture and forage potential look good in March, heifer retention will be much more significant in the spring, he said.
Herd rebuilding is now more than just a rumor, with fewer top quality heifers for sale and increased competition on those offered, USDA Market News reported on Nov. 1.
Heifer calves are noticeably tighter, with producers holding back heifers due to cheaper corn and feed prices and more available hay stocks and winter grazing compared with the last year or two, the report stated.
Profitability potential has been quite strong the last two years as well, but drought-ravaged pastures preventing herd expansion. While the motivation to expand is strong, it will mean little if another drought develops, Meyer and Steiner stated.