With pastures slowly starting to look better and feed prices on the way down, heifer retention is in the beginning stages, a Purdue University economist said Tuesday.
Though beef cattle numbers have been falling since 2007 due to drought conditions that drove feed prices higher and pasture quality lower, favorable weather is appearing on the horizon, returning better prospects for grain crops.
Specifically, Hurt estimates that corn prices could fall by $1.50 per bushel, and fall soybean meal prices could be as low as $150 per ton lower than current old-crop prices. And pastures in key beef states are really shaping up.
"Beef cow operations in some parts of the country where pastures have been restored are probably getting ready to retain heifers," said economist Chris Hurt.
Hurt noted that since 2007, beef cow numbers have declined in the Southeast by about 700,000 head, or 12%. Midwest numbers have dropped by 680,000 head, or 14%.
"Both of these areas should have the pasture and the feed to begin heifer retention," he said, noting that the northern Plains is another area "ripe for expansion."
Nearly three-quarters of the U.S. pastureland is now rated in fair, good or excellent condition, according to the USDA. That's compared to less than half at this time last year. Notable exceptions are the southern Plains and the Western U.S., which have about 43% of the nation's beef cows, according to Hurt.
"Initial retention of heifers likely will occur this fall in areas primarily east of the Mississippi River, plus the Delta, the western Corn Belt and the northern Great Plains," Hurt said. He estimates that the area currently has 57% of the nation's beef cows.
But, there is a caveat: Hurt notes that better pastures and lower-priced grain is only part of the herd recovery equation. Higher calf prices must shape up, also.
Current calf prices are up slightly since June, but likely not enough to stimulate major expansion. So while heifer retention and expansion plans will begin this year, national beef production will drop by about 4% in the last half of 2013 and 5% in the first half of 2014, according to USDA.
The drop should lead to higher finished cattle prices, which would lead to higher calf prices.
"The industry might see the start of heifer retention this fall, but the magnitude of expansion is expected to be low and slow to get underway," Hurt said. "Beef cow producers know that herd expansion is a long-term investment, and they generally want a more extended period of favorable returns before making major financial commitments."
Source: Purdue University