Drought Could Alter Cattle Herd Plans

The Jan. 31 USDA Cattle (inventory) report should provide an update on the condition of the US herd, but drought could have something to say about how things turn out, said Derrell Peel, Oklahoma State University agricultural economist in a letter to Extension Agents called Cow-Calf Corner.

The report provides Jan. 1 cattle inventories for a variety of classes as well as the calf crop for the previous year with a complete breakdown for all states, Peel said.  It also may include revisions to previous reports, which can complicate interpretation of the report.

This report follows the July report that provided national numbers for the same inventory categories but was based on a smaller survey and did not include state values, he said.  However, the July report did provide the first 2021 calf crop estimate.




There is little doubt the beef cow herd is smaller than a year ago, Peel said.  The general feeling seems to be that the herd likely decreased 1.5% to 2.0%, or more, in 2021.

The level of beef cow slaughter in 2021 was up 9.1% leading to a culling rate of 11.44% for the year, the highest since 2011, he said.  In 2011, the beef cow herd decreased 2.04%.

However, the net change in the beef cow herd last year also depends on what happened with beef replacement heifers, Peel said.

On Jan. 1, 2021, the number of beef replacement heifers was 18.7% of the beef cow herd, he said.  This level indicates neither significant herd liquidation nor expansion.  In the last two decades the beef replacement heifer percentage has varied from 16.6% in 2011 (liquidation) to 21.0% in 2016 (expansion) and has averaged 18.2%.

The inventory of heifers calving was much higher in absolute terms last year than in 2011, Peel said.  This likely means some of the additional 2021 cow culling was offset by more bred heifers entering the herd.  The heifer calf portion of the replacement heifers from a year ago may well have been diverted to feeder markets but many of the sizable inventory of bred heifers likely entered the herd.




All of that is complicated by last year’s drought, which affected what producers had to do as opposed to what they would like to do, Peel said.  It’s hard to anticipate the number of replacement heifers in the upcoming report because continuing drought conditions likely are restricting what some producers are able to do.  It also is possible that some producers outside of drought areas are holding a few extra replacement heifers to speculate on rebuilding demand this year.




The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $137.61 to $138.97 per cwt, compared with last week’s range of $139.49 to $141.00.  FOB dressed steers and heifers went for $215.12 to $216.32 per cwt, versus $216.27 to $218.77.

The USDA choice cutout Wednesday was up $2.11 per cwt at $291.60, while select was up $2.04 at $280.43.  The choice/select spread widened to $11.17 from $11.10 with 82 loads of fabricated product and 34 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 $1.45 to $1.65 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.35 over Mar, which settled at $6.10 1/2 a bushel, up $0.11.

The CME Feeder Cattle Index for the seven days ended Tuesday was $161.24 per cwt down $0.12.  This compares with Wednesday’s Jan contract settlement of $161.40 per cwt, down $0.05.