Beef Buzz News
Lance Zimmerman Projects Drought will Influence Cow Numbers into Next Year
Thu, 21 Jul 2022 11:44:56 CDT
Senior Farm and Ranch Broadcaster, Ron Hays, is visiting with Rabobank’s Senior Beef Analyst, Lance Zimmerman. Veteran beef industry research analyst and economist, Zimmerman has just joined Rabobank and plans to continue providing unparalleled insight to beef industry members and other Rabobank clients and stakeholders as part of Rabobank’s Food and Agriculture North America team.
Hays and Zimmerman talked about the mid-year cattle inventory reports from USDA coming up on Friday. Regarding the report, Zimmerman said it is going to be a really important report for the industry and it will clearly be showing a reduction in the number of mama cows and heifers in the U.S. beef herd. Hays and Zimmerman talked about the July mid
“We are on pace for a 13.5 percent culling rate,” Zimmerman said. “The prior highs, which we hit on two different occasions were 12.5 percent, meaning we slaughtered 12.5 percent to 13. 5 percent this year that January 1st cow number.”
Zimmerman said liquidation is going to be fierce in the cow herd this year.
“I think for me, what is more telling, is what happened on the heifer side, and I think we will see that reflected in the cattle inventory report,” Zimmerman said. “We have moved a lot of replacement heifer candidates into the feeder heifer population.”
Lack of forage availability due to drought, Zimmerman said, is a large part of this year’s high liquidation rates.
“We are desperately going to need some rain through the second half of the year and through the winter and spring of next year to really turn that trend,” Zimmerman said. “But a number we thought we never want to revisit again- those ‘14 cow herd lows are within sight now over the next several years just based on the liquidation that we have gone through over the last 12 months.”
In the event of cow numbers declining due to various factors, it takes time for the production cycle to fill up again.
“As a CattleFax analyst, you’ll hear me say the same message here at Rabo, is that expansions and contraction cycles have long tails, and they take a long time to cycle through and change those trends,” Zimmerman said. “It takes significant moisture just as it takes significant multi-year droughts to really turn these herds one direction or the other.”
We are in a situation, Zimmerman said, where the drought is probably going to continue to influence contraction all the way into next year.
“Hopefully by the end of 2023, somewhere in that midpoint to end of 2023, if we start getting some rain and precipitation, we can start moderating that contraction trend, moderating the culling rate, and as we look towards 2024 and hopefully turn that tide and start turning it in the other direction,” Zimmerman said. “In all likelihood, we probably still have one more year of contraction ahead of us.”
There are probably 1-2 more years of a stabilization period at those lows, Zimmerman said, and then as we look at late ’24, end of ’25, we can start turning that cow herd higher again.
“While that sounds like a long way down the road, that is probably about the fastest that timeline could work out because are big picture trends that can take a while to shoot the other direction,” Zimmerman said.
Click the LISTEN BAR below to hear more from Ron Hays and Lance Zimmerman as they talk about a projection for the production cycle and USDA report coming out this Friday.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
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