When cattle producers begin rebuilding their herds, the main factor limiting the process could be a dearth of available heifers, said Derrell Peel, Extension Livestock Marketing Specialist at Oklahoma State University, in a University release.
DECLINING INVENTORIES
The July Cattle (Inventory) report showed herds continuing to decrease, he said. The total inventory of cattle and calves was 95.9 million head, down 6.7% from the recent cyclical peak in 2018, and just fractionally above the 2014 low.
The July 1 beef cow herd was 29.4 million head, down 9.3% from the 2018 peak, 1.2% less than the 2014 low and the lowest in the entire data series back to 1973, Peel said.
Estimated supplies of feeder cattle from that report were 34.4 million head, down 3.6% year over year, he said. The 2023 calf crop was projected at 33.8 million head, down 1.9% year over year and down 2.5 million from the 2018 peak.
Feeder supplies will continue to shrink into 2024 at least, Peel said.
RISING CALF PRICES
Rapidly rising calf prices in 2023 have not yet provoked any heifer retention and herd rebuilding, he said. The beef replacement heifer inventory was 4.05 million head, down 2.4% from last year and the lowest ever in the July Cattle report.
Not only were replacement heifer inventories low, but the supply of other heifers that could be used for breeding also was low, Peel said.
The July Cattle report showed an inventory of other heifers at 7.3 million head, down 5.2% year over year, he said. The inventory of other heifers was only 600,000 more than the lowest recent other heifer inventory in July of 6.7 million head in 2015.
However, the July Cattle on Feed report pegged the number of heifers in feedlots at 4.47 million head, unchanged from last year and 1.14 million more than the recent 2015 low, Peel said. This means the residual supply of other heifers not already in feedlots was estimated at 2.8 million head, the lowest in available data back to 1996.
HIGHER PRICES COMING
Although the current feeder cattle price are near record highs, even higher prices are ahead, Peel warned. The previous record high calf prices occurred after heifer retention was well underway and feeder cattle supplies were squeezed.
That process may begin in late 2023, but the tightest feeder supplies will not occur until 2024 or possibly into 2025, he said. With the pipeline of beef replacement heifers and residual other heifers extremely low, heifer retention likely will begin mostly with heifer calves.
Yet the inventory of calves under 500 pounds on July 1 was 26.3 million head, down 2.6% year over year, Peel said.
With apologies to Shakespeare…”My kingdom for a heifer”.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $174.90 per cwt to $189.24, compared with last week’s range of $179.20 to $190.48 per cwt. FOB dressed steers, and heifers went for $283.11 per cwt to $292.33, compared with $284.31 to $292.45.
The USDA choice cutout Thursday was down $1.17 per cwt at $302.01 while select was up $0.84 at $278.31. The choice/select spread narrowed to $23.70 from $25.71 with 73 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 steady at $1.85 to $2.05 a bushel over the Sep corn contract, which settled at $4.80 3/4 a bushel, down $0.07 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $244.88 per cwt, up $0.19. This compares with Wednesday’s Aug contract settlement of $246.82 per cwt, down $1.65.