The Incredible Shrinking Cow Inventories
Since 2010, drought has reduced pasture availability, forcing cows to slaughter, feeder cattle out of Mexico, and feeder cattle into feedlots prematurely. The drought has also resulted in successively smaller calf crops. Since one year’s calf crop is the bulk of the next year’ssupplies of feeder calves and, subsequently, of fed cattle, smaller calf crops translate into successive reductions in expected annual beef production.
Inventories of all cattle and calves of 89.3 million head on January 1, 2013 reached their lowest level since 1952, when the January 1 inventory of all cattle and calves was 88.1 million head. The January 1, 2013 inventory of beef cows was 29.3 million, the lowest since 28 million in 1962. Total commercial cow slaughter in 2011 and 2012 proceeded at 17 and 16.6 percent of January 1 total cow inventories—well above the more typical rates of 12 to 15 percent of January 1 cow inventories. This rate of cow slaughter, combined with a smaller percentage of heifers entering the beef cow herd, left the January 1, 2013 beef cow inventory 2.9 percent below the revised 2012 inventory. Beef replacement heifers were up, but only by 1.9 percent over the revised 2012 inventory. This level of heifer retention is not likely to lead to an increase in beef cow inventories in 2013. Assuming normal weather patterns, producers are expected to begin retaining both cows and heifers for breeding. As this happens, beef supplies will likely decline as fewer cows are sent to slaughter and fewer heifers are placed in feedlots for beef production. This is expected to accelerate over a period of several years until enough heifers have been retained to increase feeder cattle supplies to levels that will provide increased beef production.
A Bump in the Road for Cattle Inventory Dynamics
Current forecasts assume normal weather patterns in 2013—i.e., that the drought will dissipate this year. As a result, stocker operators are expected to grow calves on pasture rather than place them prematurely in feedlots. Normal growout of feeder cattle on pasture during the spring and summer would allow stocker operators and cattle feeders to spread placement of feeder cattle in feedlots more uniformly over the year. Stocker operators and cattle feeders will have incentives (higher anticipated prices and lower feeding costs) to place feeder cattle in feedlots later in the year, especially in the fourth quarter of 2013, when expected lower prices for corn and other feeds will follow from harvest of the 2013 crops. Cowcalf producers are also expected to withhold heifers from feeder cattle supplies, thereby reducing feeder cattle supplies that will support cattle and beef prices during 2013. Beef production is expected to decline from 2012 levels.
However, as the drought has continued thus far into 2013, liquidation of cows has remained relatively high. The cow slaughter may add to near-term beef supplies, particularly of processing beef if forage supplies tighten. Feeder calves may continue to be placed in feedlots earlier and at lighter weights than would be the case if pasture conditions allowed them to be grown on pasture rather than on highpriced corn.
Source: USDA