The current rate of cow and heifer slaughter indicates continued herd liquidation, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in a university letter called Cow-Calf Corner.
The Jan. 1 USDA Cattle (Inventory) report included a beef cow herd of 28.9 million head, down 3.6% year over year and the smallest beef cow total since 1962, Peel said. More importantly, the report also included an inventory of beef replacement heifers of 5.16 million head, down 5.8% from the previous year.
The replacement heifer total included the inventory of heifers expected to calve at 3.17 million head, down 5.1% year over year, he said. The replacement heifer total and heifers expected to calve were the lowest since 2011.
BY THE NUMBERS
The available supply of bred heifers, combined with beef cow culling this year will determine the change in the beef cow inventory this year, he said. From the beginning of the year, the supply of bred heifers meant 2023 beef cow slaughter would have to decrease sharply…in excess of 18% year over year…in order to avoid additional annual herd liquidation.
Beef cow slaughter has been lower compared with last year, Peel said, reaching a maximum decrease of 13.8% in early September…a significant decrease, but not enough to prevent additional herd liquidation.
The July Cattle report confirmed the beef cow herd was down 2.6% from 2022 by mid-year, Peel said.
Since Labor Day, a very strong seasonal increase in beef cow slaughter narrowed the gap from last year, he said. In the last 10 weeks, beef cow slaughter has been down 7.0% year over year, leading to a mid-November year-to-date decrease of 12.1%.
That level of beef cow slaughter means the Jan. 1, 2024, beef cow inventory is likely to be down at least 2.5% from 2023, Peel said.
COMING HEIFERS
The January 2023 Cattle report also included the inventory of heifers available for breeding (calculated as the total replacement heifer inventory minus heifers expected to calve).
This category of replacement heifers was just less than 2 million head, down 6.9% year over year and was the lowest in 23 years of available data, Peel said. Typically, some additional heifers (out of the Other Heifer inventory category) also are bred to produce the total supply of bred heifers going into the next year.
Heifer slaughter also is drawn from the inventory of Other Heifers, he said. Heifer slaughter has decreased 2.5% thus far in 2023 but remains relatively large.
Heifer slaughter was unchanged year over year in the first half of 2023 but has accelerated since July with a decrease of nearly 7% since Labor Day, Peel said. Nevertheless, it seems likely the available supply of bred heifers will remain limited in 2024.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $176.84 per cwt to $178.97, compared with last week’s range of $177.68 to $180.99 per cwt. FOB dressed steers, and heifers went for $278.47 per cwt to $280.42, compared with $279.82 to $284.01.
The USDA choice cutout Thursday was up $1.99 per cwt at $299.02 while select was up $0.66 at $264.75. The choice/select spread widened to $34.27 from $32.94 with 148 loads of fabricated product and 33 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 $1.35 to $1.40 a bushel over the Dec corn contract, which settled at $4.61 3/4 a bushel, up $0.12.
The CME Feeder Cattle Index for the seven days ended Wednesday was $224.77 per cwt, up $2.52. This compares with Thursday’s Jan contract settlement of $219.95, down $2.25.