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Agricultural News


Drought Impacts on Beef Cow Herd Could Accelerate This Fall

Tue, 04 Sep 2012 10:52:15 CDT

Drought Impacts on Beef Cow Herd Could Accelerate This Fall
In the Cow-Calf Corner of the latest edition of Oklahoma State University's Extension newsletter, Livestock Marketing Specialist Derrell Peel says the drought's impact will most likely continue into the fall and beyond.

It is difficult to estimate just how much impact the drought this year has had on the cow herd. Beef cow slaughter for the year to date is down nearly 11 percent from last year, a smaller decline than previously expected. While this indicates some additional herd liquidation, just how much more beef cow slaughter would have declined without a drought is uncertain. Perhaps even more uncertain is what is happening with replacement heifers. The inventory of beef replacement heifers was up slightly at the beginning of the year but the drought could be forcing producers to divert more heifers into feeder cattle markets rather than entering the herd as breeding animals. The number of heifers on feed on July 1 was up slightly from last year. The combination of cow slaughter and heifer placement into the herd will determine the year over year changes in the beef cow herd inventory.   

Whatever level of liquidation has already occurred leaves the important question of whether producers have made enough adjustments relative to forage conditions and winter hay supplies. There are some anecdotal indications that minimal adjustments in cattle numbers have been made in some areas leaving those operations especially vulnerable to winter weather conditions. Pasture and range conditions remain very bad in many regions, though most areas have shown slight improvement recently. Percent of pastures and ranges rated as poor to very poor are 59 percent for the entire country with higher percentages for the Great Plains (77 percent); Corn Belt (69 percent); and Southern Plains (66 percent) along with the Western region at 54 percent. These are slightly offset by significant improvement in pasture conditions in the Southeast and Northeast.   

Poor summer grazing conditions this year are accompanied by severely reduced hay production. The August USDA Crop Production report included estimates of 2012 alfalfa and other hay production for the U.S. and for most states. Alfalfa hay production is estimated to decrease by 21.5 percent and other hay production is projected to decrease by 13.3 percent compared to the 2006-2010 average. These combine for an estimated 2012 all hay production for the U.S. that is 17.3 percent smaller than the 2006-2010 average and would be the smallest total U.S. hay production since 1976. This estimate includes 21 states with all hay production down by more than 10 percent and includes 13 states with reductions in excess of 20 percent. Current year hay production plus May 1 hay stocks represent the total supply of hay available going into the winter. Total U.S. May 1 hay stocks were 5.9 percent above the 2006-2010 average but this masks the fact that hay stocks were down more than 10 percent in 14 states, including several states impacted by drought in 2011 or 2012 or both years.

The estimated all hay supply for 2012 (May 1 stocks plus 2012 production) is down by 14.4 percent for the U.S. compared to the 2006-2010 average including 18 states down more than 10 percent, of which 12 states are down more than 20 percent. Arkansas is the lowest with an estimated 2012 total hay supply down 49 percent from average, followed by Iowa, Oklahoma and Kansas, all down 33 percent or more. An additional five states (Illinois, Indiana, Missouri, Nebraska and Wisconsin) have 2012 hay supplies down more than 25 percent from average. Other states with estimated 2012 hay supplies down 15 percent or more include Colorado, Kentucky, South Dakota, Texas and Wyoming. Limited hay supplies will be accompanied by record hay price. Current Livestock Marketing Information Center (LMIC) projections put the 2012/2013 season average hay price at a record $195/ton, exceeding the 2011 record of $173/ton and up 60 percent from the 2006-2010 average of $122/ton.

Cow culling normally peaks seasonally in the fourth quarter and we may be vulnerable to stronger than normal culling this year. The reality of limited forage and hay supplies combined with high hay and supplement feed cost could prompt additional sales of cows and other cattle this fall. The current pace of beef cow slaughter implies a herd culling rate of 11.4 percent, which is above the long term average of 9.6 percent, but well below the 2011 rate of 12.3 percent. Additional cow culling may be needed this fall. For example, a modest increase in the beef cow herd culling rate to 11.6 percent, would mean that beef cow slaughter for the remainder of the year would be down only 5.25 percent compared to last year and would result in a year over year decrease in beef cow slaughter of 8.5 percent. It all depends on how much adjustment to limited forage supplies has already been done and how much more might be needed in the next couple of months.


   

 

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