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Agricultural News

The Cattle Industry Question for 2015- Will They or Won't They Expand the Cow Herd?

Fri, 02 Jan 2015 04:46:25 CST

The Cattle Industry Question for 2015- Will They or Won't They Expand the Cow Herd? The US Department of Agriculture, in an Economic Research Service report on the livestock industry released mid December, offered an analytical answer to the question, "Will They or Won't They Expand the Cow Herd?"

You may remember the black eight ball toy that has been around for several decades- you shake the ball and at the bottom of it is a window where you can see various answers float up to where you can read them. Answers like- "Definitely Yes" or "Not Likely." Well, in this December report, the USDA took several paragraphs to answer the question with an "It depends." Here's the USDA look at rebuilding the mama cow herd in 2015:

"While there has been much speculation about rebuilding the national cow inventory, the 14-percent share of cow slaughter relative to the January 1, 2014, total U.S. cow inventory is not as robust an indication as it has been during expansionary phases of past cattle cycles. Generally, lower proportions of cows in the slaughter mix imply cows are being withheld from slaughter. For example, in 2004-06-the last time expansion was observed on any scale-the ratio of total annual commercial cow slaughter to January 1 cow inventories was below 13 percent each year, with 2005 at 11.7 percent.

"The relative proportion of heifers in the slaughter mix has also declined in 2014. In October 2014, heifers showed a 9.4-percent drop in slaughter compared with October 2013. Through mid-November, heifer slaughter made up about 35 percent of total federally inspected steer and heifer slaughter compared with 36 percent for all of 2013 and a range of 36 to 40 percent going back to 1997. This relatively small proportion of heifer slaughter likely indicates some heifer retention for breeding stock. The Cattle report that NASS will release January 30, 2015 will provide an estimate of heifers retained for cow replacements.

"Because heifers retained for breeding are unavailable for placement in feedlots for near-term beef production, retaining heifers would exacerbate the already reduced supply of feeder cattle available for placement on feed, which is a direct result of current extremely low cow inventories. However, extra heifer retention would mean a quicker recovery of cow inventories and a shorter time to greater future beef production. "Quick" is a relative term, however, because of the extended period required to get beef from a heifer: A heifer retained from the 2014 calf crop (i.e., a spring calf) would not be bred until summer 2015. Her calf-born in spring of 2016 and not placed on feed until sometime in 2017-would likely be slaughtered for beef in 2017 or early 2018. Further, it takes heifer retention over several calf crops to build the cow inventory to levels that translate into significant increases in beef production. However, heifers currently retained for breeding could still find their way into feedlots rather than breeding herds for a number of reasons, including poor forage conditions in 2015, even higher feeder calf prices, lower replacement female prices, or increased incentives for producers to exit the industry.

"With the U.S. total cow inventory at lows not observed in decades, speculation about when herd expansion will take place has been a concern of many analysts.

"The current situation indicates that cow-calf producers may be having difficulty deciding whether to keep heifers for breeding-which will generate future income-or selling those heifers at record prices for placement in feedlots for current income. Given the average age of cow-calf producers-60 in 2008, the last time an Agricultural Resource Management Survey for cow-calf operations was conducted and high costs of doing business, it is not difficult to understand the desire to capture current income. How these circumstances and dilemmas play out will influence beef production for the next several years. The bottom line is that 2015 may be too soon to see much cow-herd expansion. The highly anticipated January 1, 2015, Cattle report should provide some insight for analyzing the prospects for herd rebuilding."

To view the entire USDA report on Livestock, Poultry and Dairy, click here.



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