Economist: 2017 Cattle Herd Growth Uneven

The US beef herd grew 7.3% since the latest low on Jan. 1, 2014 to 31.2 million head on Jan. 1 this year, and there are indications it will continue to grow aggressively.  However, this growth can be expected to be uneven across major cattle states.

Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, said Monday in his Cow/Calf Corner newsletter that “the inventory of beef replacement heifers relative to the beef cow inventory is the best indication of future beef herd expansion.”

The Jan. 1 ratio was 20.6%, down slightly from the 2016 ratio of 21.0%, which was the highest in 48 years, Peel said.

The heifer ratio has been sharply highly since herd expansion began in 2014 with the last three years being the three highest since 1969, he said.  The four-year average since 2014 was 20.4%.  The average for the 25 years prior to 2014 was 17.3%.




The long-term average shows that beef replacement heifer ratios generally are higher in northern parts of the US with the largest averages in the Northwest, Northern Rockies, Northern Plains, Great Lakes and Northeast.  The reasons aren’t entirely clear but may be because of the colder climate, different cattle types and higher proportions of purebred operations.  These regions currently account for 29.4% of beef cows.

The lowest average ratio was found the South (AL, GA, FL) although the lowest ratio in 2017 was in the Appalachian region (KY, TN, WV), Peel said.

In fact, the Appalachian region was the only region where the 2017 heifer ratio was below the long-term average.  This may indicate that little additional expansion is to be expected here.

Based on the current heifer ratio compared with the long-term average, the Northwest, Great Lakes, Gulf and Eastern Seaboard regions also may show relatively slower herd growth this year, he said.  Continued stronger growth is likely in other beef cow regions including the northern and southern Rockies, northern and southern Plains and the Midwest.

The Southern Plains (KS, OK, TX) is the largest beef cow region with 26% of the national total (8.13 million head in 2017) and has added the most beef cows of any region since expansion began, Peel said.  The region added 14.1% to the beef cow inventory, accounting for 47.3% of the 2.12 million head of additional beef cows nationwide since 2014.

Nevertheless, the current Texas beef cow inventory is still down more than 600,000 head from average pre-drought levels.  Herd expansion was expected to continue in Texas, although a complete return to pre-drought levels may be unlikely, he said.

The number of beef replacement heifers (and the heifer ratio) dropped in Oklahoma last year, suggesting perhaps a slower rate of herd expansion in the number two beef cow state this year.  Oklahoma already expanded rapidly since 2013 and is currently at the highest beef cow herd inventory since 1984.

Kansas also is at the largest state beef cow inventory since 1984.




Average fed cattle exchange auction prices Wednesday were $3.13 per cwt lower at $118.84, versus $121.97 a week earlier.

Cash cattle then traded at $119 to $120.50, mostly $119.75 to $120.50, on a live basis, up $0.50 to $0.75.  Dressed-basis trading was at $190 to $190.50, steady to up $0.50 from $190.

The USDA’s choice cutout Monday was up $0.63 per cwt at $188.26, while select was up $0.93 at $186.58.  The choice/select spread narrowed to $1.68 from $1.98 with 84 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $128.41 per cwt, up $0.24.  This compares with Monday’s Mar settlement of $121.82, down $0.25.