A Few Thoughts by John Nalivka: Record Profits plus Grass = Beef Herd Expansion
The size of the U.S. cattle herd grew 3 percent during 2015 leaving the number of cattle in the country at just under 92 million at the beginning of this year. The number of beef cows was up 4 percent from a year earlier while the number of beef replacement heifers was reported to be 3 percent higher than a year ago. The number of heifers that were expected to calve was 6 percent above a year ago. USDA reported the 2015 calf crop was up 2 percent from 2014.
Herd building was in place well before the sharp downturn in prices last fall as much of this increase is the result of decisions made two years earlier when prices were record high. Producers do respond to record prices and good grass! With increased cow slaughter from 2011 to 2013 as a result of drought, I believe the average age of the cow herd has declined. This allowed ranchers to sharply reduce culling last year to build herds. With sharply higher heifer retention, a younger herd can be maintained for a couple of years.
Beef cow slaughter last year was down 13 percent from the prior year and the lowest since USDA started disaggregating cow slaughter between beef and dairy breeds in 1984. More important to analyzing the industry, last year’s beef cow slaughter represented only 7.7 percent of the last year’s beginning beef cow inventory. This was the lowest percentage of the beef cow herd slaughtered since those records began.
Looking at the other component of herd building – heifer retention – there was a sharp increase in the number of heifers calving and entering the cow herd last year. In fact, during 2015, the first calf heifers accounted for nearly 13 percent of the beef cows in the 2014 when the decision was made to go ahead breed them. The decision to retain heifers for the herd is made in the fall of the year, but the final decision isn’t made until the bulls are turned out the next spring. So, as a percent of the 2014 cow herd, those heifers that were bred during 2014 to calve last year was the largest number since 1993.
So, the pace of herd building has been stepped up and with a larger calf crop, the supply of market-ready cattle will begin to increase – during the second half of 2016. Coupled with the trend of increased production efficiency, beef production is at the forefront of once again trending higher and for 2016. Sterling Marketing projections are for a 4 percent in beef production during 2016.
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