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Agricultural News

Expectations for Upcoming USDA Cattle Reports

Mon, 17 Jan 2022 08:54:33 CST

Expectations for Upcoming USDA Cattle Reports Weekly, Derrell Peel extension livestock marketing specialist at Oklahoma State University, offers his expertise in the cattle industry. This is a part of the weekly series known as the "Cow-Calf Corner" published electronically by Paul Beck. Today, Peel talks about what to expect in U.S. Department of Agriculture cattle reports.

In addition to the monthly Cattle on Feed report on January 21, USDA will issue the annual Cattle report on January 31. This report provides January 1 cattle inventories for a variety of cattle classes as well as the calf crop total for the previous year with a complete breakdown for all states. The report may also include revisions to values reported previously, which can complicate interpretation of the report. This report follows the July Cattle report which provides national numbers for the same inventory categories but is based on a smaller survey and does not include individual state values. The July report provided the first estimate of the 2021 calf crop.

The report provides confirmation of what did happen last year and provides some information that helps to shape expectations for this year. For example, there is little doubt that the beef cow herd is smaller compared to a year ago. The general feeling among analysts seems to be that the herd likely decreased 1.5-2.0% in 2021, with some possibility that the decrease was over 2%. The level of beef cow slaughter in 2021 was up 9.1% year over year leading to a culling rate of 11.44% for the year, the highest since 2011. In 2011, the beef cow herd decreased 2.04%. However, the net change in the beef cow herd in 2021 depends also on what happened with beef replacement heifers.

On January 1, 2021, the number of beef replacement heifers was 18.7% of the beef cow herd. This level of replacement heifers indicates neither significant herd liquidation nor does it suggest aggressive expansion. In the last two decades the beef replacement heifer percentage has varied from a low of 16.6% in 2011 (liquidation) to a high of 21.0% in 2016 (expansion) and has averaged 18.2%. Comparing once again to 2011, the inventory of replacement heifers in 2021 was well above the level that year. The replacement heifer inventory consists of both bred heifers (coming first-calf heifers) and heifer calves in development for breeding. The inventory of heifers calving was much higher in absolute terms last year compared to 2011. This likely means that some of the additional cow culling in 2021 was offset by more bred heifers entering the herd. The heifer calvesí portion of the replacement heifers from one year ago may well have been diverted to feeder markets but many of the sizable inventory of bred heifers likely entered the herd somewhere.

All this discussion is complicated by the drought conditions in 2021which impacted what producers had to do as opposed to what they would like to do. The same may be true in 2022. Itís hard to anticipate the number of replacement heifers in the upcoming report because continuing drought conditions is likely restricting what some producers are able to do. It is also possible that some producers outside of drought areas are holding a few extra replacement heifers to speculate on rebuilding demand in 2022. Of course, drought conditions going forward will determine if that is successful or not. The northern plains regions that have been and continue to be in severe drought are areas that normally hold a higher percentage of replacement heifers compared to the rest of the country. They may not be able to do so going into 2022. If heifer calves from one year ago were diverted to feeder markets, the inventory of bred heifers in the upcoming report may be lower. The remainder of the replacement heifer inventory is heifer calves, which could be up if producers are trying to compensate for fewer bred heifers but, again, itís not clear that the continuing drought conditions is allowing more replacement heifer calves to be held. It seems likely that the inventory of beef replacement heifers will be significantly lower in this report.



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