Tim Petry’s Market Advisor: Southern drought conditions cause lower cattle numbers | TSLN.com

Tim Petry’s Market Advisor: Southern drought conditions cause lower cattle numbers

Tim Petry, NDSU Livestock Marketing Economist

The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) released the “Cattle report” on Jan. 27, 2012. The report confirmed what many cattle market observers had expected. The record-setting drought in the southern U.S. has led to beef cowherd liquidation, fewer calves on cereal-grain pastures and more cattle in feedlots. However, record high feeder cattle prices stimulated interest in beef heifers, with replacements increasing enough in areas with good moisture conditions to cause an increase for the entire U.S.

All cattle and calves in the U.S. as of Jan. 1, 2012 totaled 90.8 million head, which is about 2 percent below the total of 92.7 million on Jan. 1, 2011. This is the lowest Jan. 1 inventory of cattle and calves since 1952, when the total was 88.1 million. However, it should be noted that beef production totaled more than 26 billion pounds in 2011, compared with about 10 billion in 1952. The 26 billion is just less than the record 27 billion pounds produced in 2002, so the beef industry produces much more beef with the same number of cattle that existed in the 1950s.

At 29.9 million head, beef cows that have calved were down more than 3 percent from last year. The decline was not a surprise given the severe drought that has plagued the southern Plains. Beef cow numbers declined 660,000 head (-13 percent) in Texas, 288,000 head (-14 percent) in Oklahoma, 53,000 (-11 percent) in New Mexico and 51,000 (-3 percent) in Kansas. The total decline in these major drought states is 1,052,000 head.

Beef cow numbers in the entire U.S. declined less than a million head (966,700).

Some beef cows did move from the drought-stricken area to neighboring states where moisture conditions were better. Beef cows increased by 112,000 head in Nebraska; 55,000 in Iowa; 22,000 in Colorado; and 20,000 in Wyoming.

Beef replacement heifers more than 500 pounds in the U.S., at more than 5.2 million head, were up 73,000 (1.4 percent), compared with last year. About 3.2 million of those are expected to calve in 2012. Similar to beef cows, replacement heifers declined 60,000 head (-10 percent) in Texas and 55,000 (-15.5 percent) in Oklahoma, while replacements increased by 55,000 (18 percent) in Nebraska, 35,000 (29 percent) in Colorado and 25,000 (18 percent) in Wyoming. Milk cow replacements were down 1 percent in the U.S., while other heifers more than 500 pounds were down 2 percent.

The combined U.S. total of calves less than 500 pounds and other heifers and steers more than 500 pounds outside of feedlots was 25.7 million, which is down about 4 percent. This means that declining feedlot placements in the next several months can be expected. Smaller numbers should be supportive to calf and feeder cattle prices.

After cattle numbers increased in North Dakota during 2010, both the number of beef cows and beef replacement heifers declined during 2011. Beef cows in North Dakota on Jan. 1, 2012, at 862,000 head, declined 2 percent, while beef replacement heifers, at 183,000 head, declined 1 percent. That was the second highest number of beef replacements in North Dakota since 2007 and the third highest in 17 years. The decline in numbers likely was impacted by the third harsh winter in a row, which caused adverse calving weather. In addition, major spring and early summer flooding along all river systems in the state caused above-normal cow and calf losses, damaged and even destroyed cattle production facilities, and flooded pastures and hay land.

The 2011 U.S. calf crop was estimated at 35.3 million head, which is down 1 percent from 2010. Smaller cow numbers signal another smaller calf crop in 2012, so supplies of all market classes of cattle will continue to be historically tight.

Weather will continue to be a wild card in cattle prices and numbers. Although some recent rains in the southern Plains have been beneficial, the drought is far from over. Also, parts of the western Corn Belt and northern Plains are experiencing a very warm, dry winter.

Seasonally high calf prices in the spring are dependent on the potential for good grass conditions. Beef cow slaughter was 4.6 percent higher in 2011 because of the southern Plains drought. Cow slaughter is expected to decline in 2012 but would be trumped by expanding drought conditions. Corn supplies also are historically tight, so a near-record crop is needed to keep prices from increasing. Higher corn prices would affect feeder cattle prices adversely.

– NDSU Extension Service

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