Current data are giving mixed signals about how US cattle herd inventories have changed this year, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist in a letter to Extension agents.
Many will be watching the report closely as they reset their marketing strategies for 2021.
COW/HEIFER DYNAMICS AFFECT HERD CHANGES
Historically, the replacement heifer percentage drops below 18% during herd liquidation, he said. On Jan. 1, beef replacement heifers were 18.4% of the beef cow inventory, down from the 21.0% peak in 2016, when herd expansion was in full force.
The July inventory estimate for beef replacement heifers was unchanged from last year but also was low enough to suggest some herd liquidation, Peel said.
Heifers not retained for breeding end up in the feedlot. On average, the number of heifers in feedlots in 2020 was down 1.1% year over year, with an Oct. 1 estimate that was about equal to a year ago, he said.
2020 heifer slaughter was projected to be down about 3.6% from last year, Peel said. Heifer slaughter as a percent of the cow inventory is not low enough to suggest herd expansion nor large enough to suggest significant liquidation.
However, taken together, the data seem to suggest mostly steady heifer retention, which could support a 2021 herd inventory either side of unchanged from 2020, he said.
BEEF COW SLAUGHTER SEEN HIGHER
This year’s beef cow slaughter was projected to be up about 2.6% year over year, Peel said, implying a net beef cow culling rate of 10.5%. Beef cow culling has increased from 2015’s record low of 7.6% when herd expansion was accelerated.
Herd culling above 10% is consistent with modest levels of herd liquidation, and the current level is below historical culling rates of more than 11%, he said.
The mid-year acttle report pegged the beef cow inventory down 0.8% year over year, generally consistent with the cow slaughter data this year, Peel said.
MOST-LIKELY SCENARIO
The most likely scenario appears to be a beef cowherd on Jan. 1 in the range of unchanged to down 1% from 2020, he said. This would continue the slow slide in cattle numbers and general tightening of cattle and beef production in the coming year.
Total 2021 cattle slaughter is forecast to be down about 1%, leading to a year over year decrease in beef production of 1% to 2%, Peel said.
The cattle inventory trajectory in 2021 will depend on numerous factors including control of the pandemic, US macroeconomic conditions, global protein markets, drought conditions and feed prices, among others.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains last week at $110 per cwt on a live basis, up $2 to $5 from the previous week. Dressed-basis trade was at $172, up $6 to $7.
The USDA choice cutout Tuesday was up $2.48 per cwt at $210.30, while select was off $1.17 at $195.48. The choice/select spread widened to $14.82 from $11.17 with 111 loads of fabricated product and 33 loads of trimmings and grinds sold into the spot market.
The USDA reported Tuesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.21 a bushel over the Mar CBOT futures contract, which settled at $4.66 a bushel, up $0.09 1/2.
No cattle contracts were tendered for delivery against the Dec contract Tuesday.
The CME Feeder Cattle Index for the seven days ended Monday was $138.40 per cwt, up $0.11. This compares with Tuesday’s Jan contract settlement of $139.62 per cwt, down $1.37.