The most recent slaughter data have year over year beef cow slaughter increasing as the reality of reduced pasture and hay production becomes clear, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in a letter to Extension agents called Cow-Calf Corner.
Through May, beef cow slaughter was 15% more than last year, Peel said. With nearly half the year over, it is very likely the annual beef cow slaughter total will be up by double-digits.
The current level of beef cow slaughter suggests a 2022 culling rate in excess of 13% and a potential beef cow herd decline of one million head or more, he said.
GOOD PASTURE IN SHORT SUPPLY
While some regional drought reduction improved pasture conditions locally, range and pasture conditions nationally remain at the worst level ever for this time of year, he said.
Colder-than-normal weather in northern regions this spring and reduced fertilizer use everywhere also contributed to delayed and reduced pasture and hay production, Peel said.
All of that was added to a 9% increase in 2021 beef cow slaughter over 2020 (also because of drought) and a net herd culling of 11.6%, Peel said. Drought expanded and accelerated 2021 herd liquidation, leading to a 2.33% decrease in last year’s beef cow herd.
The most recent beef cow inventory peak occurred in 2019 at 31.69 million head before declining to the Jan. 1, 2022, total of 30.13 million, a 4.9% decrease in three years, he said.
LOOKING AHEAD
The change in the beef cow herd each year depends on the net effect of heifer retention and cow culling, Peel said. The US started the year with 5.61 million beef replacement heifers, 18.6% of the Jan. 1 beef cow inventory. Of those, 3.41 million head were expected to calve in 2022.
Given beef cow slaughter so far this year, a significant level of culling is guaranteed, Peel said. In order for the level of beef cow slaughter to hold steady with last year, annual beef cow slaughter for the rest of the year would have to drop 9.4%. This is extremely unlikely.
Beef cow slaughter in 2021 was 3.56 million head, he said. An equal 2022 beef cow slaughter level implies herd liquidation given the 3.41 million heifers expected to calve this year, even if every one of those heifers actually entered the herd.
Just holding cow slaughter steady for the rest of this year still would result in an annual increase in cow slaughter of 5.9%, Peel said. This would result in a record herd culling level of 12.5% in 2022, which also seems unlikely.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $135.00 to $143.15 per cwt, compared with last week’s range of $134.15 to $142.43. FOB dressed steers, and heifers went for $213.01 to $219.02 per cwt, versus $212.70 to $218.64.
The USDA choice cutout Thursday was down $1.06 per cwt at $267.16, while select was down $0.30 at $245.38. The choice/select spread narrowed to $21.78 from $22.54 with 107 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.90 to $2.00 a bushel over the Jul futures and for southwest Kansas were steady at even the Jul, which settled at $7.88 1/4 a bushel, up $0.14 1/4.
No live cattle delivery intentions were posted Thursday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $160.08 per cwt down $0.10. This compares with Wednesday’s Aug contract settlement of $173.27, up $1.97.