Drought Effect On Cattle Numbers

This article is authored by Paul Beck, Oklahoma State University beef cattle nutrition specialist and published in Cow-Calf Corner.  It is based on the thoughts he put together for a symposium at the American Society of Animal Science meeting held in Calgary “Increasing the Resilience of the Beef Cattle Feeder Supply.”  It has been edited for style and space.

 

CLIMATE CYCLES

 

It seems the climate cycles have turned against us.  Since the early 2000’s droughts have become more frequent and more severe than any time since the 1950’s.

From the late 1960’s to the early 2000’s, we had been in a long-term wet cycle, one that appears to be abnormal compared to our historical climate since 1910.  Environmental conditions from 1970 to 2000 are the only thing many of us ever knew.

That 30-year span also corresponds to the evolution of our modern beef cattle production system.  Leading to the question, would the production practices we developed from 1970 to 2000 be sustainable in the 1950’s and 60’s?

If we are returning to that weather pattern, will they be sustainable in the future?

Along with the increasing severity and frequency of droughts, other weather-related events have become more common and more costly.  Extremes in heat and cold during the summer and winter, 1,000-year floods, out-of-control fires and other disasters have become more frequent impacting human life and agricultural productivity.

 

THE DROUGHT EFFECT

 

Droughts impact cattle numbers and drive the timing of the expansions and contractions of the cattle cycle.  Widespread drought in 2011 through 2013 resulted in a 2.5% decrease in beef cattle herd size, resulting in record-high prices stemming from the low cattle numbers.

That was the impetus for a nearly 3.5% increase in the beef cattle herd by 2018 when conditions returned to normal.  Then in 2021, a return of drought conditions, resulted in a 2.5% decrease through 2023.

The USDA estimates there is a 17.1-million-head one-time feedlot capacity, so based on 1.9 turns per year in the feedlot, 80% occupancy rates, normal heifer retention of 3.5 million head a year, normal imports of feeder calves from Mexico (1 million head) and Canada (150,000 head), and 77% weaning rate (based on 81.4% calving rate and 95% calf survival rate), we need 32.3 million beef cows to supply the feedlots each year.

We almost reached that in 2019 (31.8 million), but the beef cow herd currently is 28.2 million head.  The shortage of feeder cattle will result in changes in production practices (longer days on feed, reduced weights of feeders entering the feedlot, etc.) and increased feeder cattle prices.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $188.00 per cwt to $198.00, compared with last week’s range of $188.00 to $200.95 per cwt.  FOB dressed steers, and heifers went for $297.15 per cwt to $300.00, compared with $297.15 to $309.23.

The USDA choice cutout Monday was down $0.39 per cwt at $313.44 while select was down $0.47 at $298.33.  The choice/select spread widened to $15.12 from $15.03 with 112 loads of fabricated product and 37 loads of trimmings and grinds sold into the spot market.

The weighted average USDA listed wholesale price for fresh 90% lean beef was $375.26 per cwt, and 50% beef was $135.81.

The USDA said basis bids for corn from feeders in the Southern Plains were down $0.02 to $0.11 at $1.56 to $1.78 a bushel over the Sep corn contract, which settled at $4.00 1/4 a bushel, up $0.09 3/4.

The CME Feeder Cattle Index for the seven days ended Friday was $256.67 per cwt, down $2.40.  This compares with Monday’s Aug contract settlement of $256.40, up $0.80.