Friday, the USDA’s National Agricultural Statistics Service is scheduled to release its July Cattle (inventory) report with national estimates of inventories by category along with the first estimate of the 2022 calf crop.
With widespread drought conditions, the focus will be on the female side of the industry in terms of how much beef cow herd liquidation has occurred and how much more is ahead, said Oklahoma State University Livestock Marketing Specialist, Derrell Peel, in a letter to Extension agents called Cow-Calf Corner.
A LOOK AT THE NUMBERS
Beef cow slaughter was up 14.6% year over year in the first half of the year, following a 9% increase last year, Peel said.
“The beef cow herd inventory is likely to be down by 2.5% to 3.0% in the mid-year inventory,” he said. This would be the smallest July 1 beef cow inventory since at least 2015.
Fed cattle slaughter was up 0.6% year over year in the first half, Peel said. However, fed steer slaughter was down 1.4% while fed heifer slaughter was up 3.8%.
First-half heifer slaughter was 52.1% of the Jan. 1 inventory of other heifers, he said, the highest rate of first-half slaughter since 2004 and has averaged 48.3% in the past 15 years. Reduced beef heifer retention may lead to a decrease in the beef replacement heifer inventory of 2.5% or more.
The 2022 calf crop could be smaller by roughly 2%, Peel said. Lower inventories of steers, other heifers and calves, combined with a Cattle on Feed inventory about equal to last year, could lead to a roughly 3% decrease year over year in estimated feeder supplies outside of feedlots.
The total July 1 inventory of all cattle and calves is expected to be down by 2.0% to 2.5% year over year, he said.
FAST LIQUIDATION BOOSTING BEEF PRODUCTION
The beef cattle industry is liquidating farther and faster this year, Peel said. Augmented by continuing drought and high input prices, accelerated cow and heifer slaughter is boosting beef production in the short term but leading to a smaller-than-planned industry going forward.
At some point, drought conditions likely will ease, and producers will be interested in herd rebuilding, he said. The timing will be important, and it may take some time.
Cow culling can drop rather quickly if conditions improve, but availability of replacement heifers, especially bred heifers, may take a year or more, Peel said. Heifer liquidation this year may make a limited supply of bred heifers available next year.
If drought conditions improve this summer/fall, it may be possible to save some additional replacement heifer calves, but most will not calve until 2024, he said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $137.00 to $144.57 per cwt, compared with last week’s range of $136.51 to $149.83. FOB dressed steers, and heifers went for $216.89 to $220.34 per cwt, versus $217.59 to $224.24.
The USDA choice cutout Wednesday was down $2.04 per cwt at $270.53, while select was down $1.48 at $242.25. The choice/select spread narrowed to $28.28 from $28.84 with 92 loads of fabricated product and 26 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $2.70 to $2.80 a bushel over the Sep futures and for southwest Kansas were steady at $0.10 under Sep, which settled at $5.92 1/4, down $0.04 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $172.42 per cwt down $0.08. This compares with Wednesday’s Aug contract settlement of $177.82, down $0.92.