Cow Herd Shrank More In 2012 Than In 2011

Cow Herd Shrank More In 2012 Than In 2011

Depending on weather, some pundits think this year will be another year of holding steady at best.

The nation’s beef cow herd did not shrink as much in 2011 as the trade thought. But the herd also shrank faster in 2012 than previously thought. Those conclusions come from USDA’s revisions to Jan. 1, 2012 cattle inventories issued with the Jan. 1, 2013, Cattle Report.

The estimated Jan. 1, 2013 beef cow inventory was 29.3 million head, down 2.9% from last year. However, USDA revised the estimate for Jan. 1, 2012 up by 275,000 head, which means that the decline from 2011 to 2012 was not as severe as earlier indicated.

Depending on weather, some pundits think this year will be another year of holding steady at best.

"Though the drop in beef cow numbers during 2012 was larger in percentage terms than pre-report estimates, the inventory came in near expectations," notes Derrell Peel, Oklahoma State University economist. "In other words, we had a bigger drop from a bigger total and ended up about where we thought we would be."

Almost all of the revision in beef cow numbers was in Oklahoma and Texas suggesting that cow liquidation in 2011 was not as severe as earlier estimated in those two states. By contrast, Texas lost even more beef cows in 2012, down 12%, while Oklahoma beef cow numbers dropped a modest 1.3% in 2012.

Accelerating forced liquidations in the second year of the Texas/Oklahoma drought is a huge worry to northern Plains producers where 2013 will be the second year of drought if pastures remain parched.

Expansion not likely

USDA also revised upward Jan. 1, 2012 beef replacement heifers by adding 50,000 replacement heifers to the estimates for Nebraska and Oklahoma. This means the Jan. 1, 2012, beef replacement heifer inventory was up 2.4% from 2011. USDA estimated the Jan. 1, 2013, beef heifer inventory up 1.95% from 2012.

The large replacement heifer inventory indicates producers would like to expand. Forage supplies will dictate whether they can. While the 2012 beef replacement heifer inventory was up, the drought and continued beef cow liquidation meant a very low percentage of those potential replacement heifers actually entered the herd.

"The 2013 numbers are even more pronounced in this respect," notes Peel. "The 2013 beef replacement heifer inventory is 18.3% of the beef cow herd inventory, the highest replacement percentage since 1995. How many of those heifers enter the herd depends entirely on whether drought condition moderate in 2013."

Even with a larger pool of potential replacement heifers, the potential for herd expansion in 2013 is limited. Beef cow slaughter would have to drop sharply again. A high percentage of the heifer pool would have to enter the herd just to stabilize beef cow herd numbers.

Cow Herd Shrank More In 2012 Than In 2011

Producers need near-perfect conditions to allow much, if any, cow herd expansion in 2013. “The ongoing drought conditions make expansion unlikely.

USDA economist Shayle Shagam agrees. "Assuming normal pasture development during 2013, expected returns to cow-calf operators would support retaining beef cows and placing more heifers in the breeding herd," he says.

On January 1 producers indicated they held 2% more heifers for beef cow replacement. A smaller total cow herd and a slight decline in the total number of heifers expected to calve point to a further decline in the calf crop. This will lead to tighter cattle supplies moving into 2014. To the extent producers retain heifers for breeding from the 2013 calf crop, calf supplies seem unlikely to support an increase in beef production before 2016.

Feeder cattle squeeze

USDA revised downward the Jan. 2012 estimates in other heifers and steers. That means the 2013 estimated feeder supply was actually up slightly, but from an even bigger decrease in the estimated 2012 feeder supply.

A smaller forecast 2013 calf crop and reduced cattle imports will keep feeder cattle supplies tight. If conditions permit, rising heifer retention will further squeeze feeder supplies in the coming years.

Otte is the farm management editor for Farm Futures magazine. See www.FarmFutures.com.

TAGS: Regulatory
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish