BULL VALUES SHOULD INCREASE

Expectations by some for the return of a La Niña weather pattern heading into this summer also supports the notion of bountiful grain production. Art Douglas, PhD, professor emeritus at Creighton University and longtime CattleFax meteorologist told participants at the CattleFax outlook session La Niña will shift much of the nation outside of the northwest and southeastern portions of the country toward conditions slightly warmer and drier than last year, which will be favorable for planting and growing conditions during the spring and summer.

The flipside is that La Niña typically means below normal precipitation in Texas and the Southwest.

Cyclical Herd Expansion Ends

Now, for some fundamental reasons behind the expected improvement in cattle prices.

First, national beef cowherd expansion ended last year. There were 31.31 million beef cows at the beginning of this year, which was 374,000 head fewer (-1.18%) than the same time a year earlier.

“The peak beef cow inventory for 2019 was 31.7 million (revised down by 75,000 head from the previous report),” explained Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his mid-January market comments. “This means the total herd expansion in this cycle was an increase of 2.73 million head from the 2014 low of 29.0 million cows. That is a total cyclical expansion of 9.4% or an average of 1.9% per year for the five years of expansion.”

Similarly, the number of beef replacement heifers Jan. 1 of 5.77 million head were 113,000 head fewer (-1.92%) than the previous year. “The inventory of beef replacement heifers is 18.4% of the beef cow inventory, a level that historically has not indicated significant liquidation,” Peel explained. “However, in 2019, replacement heifers were 18.6% percent of the beef cow inventory, but sharply higher beef cow slaughter at the end of the year pushed the culling rate fractionally over 10% and resulted in modest reduction in the herd inventory.”

States with 1 million or more beef cows at the beginning of the year, and their ranking by size, were the same as a year earlier. In order of size, with Jan. 1 cow numbers in parenthesis: Texas (4.57 million); Oklahoma (2.09 million); Missouri (2.08 million); Nebraska (1.92 million); South Dakota (1.73 million); Kansas (1.43 million); Montana (1.43 million); and Kentucky (1.01 million).

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Of those eight states, beef cow numbers increased year over year in Missouri (+24,000 head or 1.17%) and Kentucky (+4,000 head or 0.39%).

For the other six states, year-over-year declines in beef cow numbers ranged from -19,000 head in Nebraska (-0.98%) to -96,000 head in Kansas (-6.28%).

Depending on the analysts you follow or how you run the beads on your own abacus, there’s little to suggest much further contraction in the nation’s beef cowherd. On the other hand, if trade with China finally breaks loose, taking more U.S. pork and beef, there could be some economic incentive to resume herd expansion.

Longer term, in the recent Agricultural Projections to 2029, USDA analysts say, “The cattle herd is expected to decline cyclically in the early part of the projection as producers respond to lower returns. A decline in cattle numbers early in the period will likely contribute to higher cattle prices, although a modest herd expansion the rest of the period pressures cattle prices lower.”

Those projections see the beef cowherd declining to 31.27 million head by 2022 and then gradually building through the remainder of the projection period to 33.42 million head by 2029.

USDA’s long-term projections forecast the five-area direct fed steer price this year at $116/cwt. then ranging from $116.37 (2024) to $121.39 (2023) over the next five years. From there, through 2029, the estimated range is $110.58 (2028) to $114.70 (2026).

USDA long-term projection see this year’s feeder steer price (basis Oklahoma City) to be $141/cwt. It ranges from Meet…Frank

$138.13 (2028) to $151.27 (2023) for the remainder of the projection period.

Keep in mind short-term projections in USDA’s long-range outlook began with the October 2019 WASDE report. Projections don’t include recent trade deals, such as the Japan-U.S. free trade agreement, phaseone China trade deal or the U.S.-Mexico-Canada trade agreement.

Working Through Current Supplies

The estimated feeder cattle supply outside feedlots Jan. 1 of 26.45 million head was 105,300 fewer (-0.40%) than a year earlier, but there were 14.68 million head on feed, which was 309,800 more (+2.16%) than the previous year and record large for the month.

“These numbers show that the last pulse of larger cattle numbers are currently in feedlots and cattle slaughter will be up in the first quarter before declining through the second half of the year,” Peel explained. “However, higher carcass weights are projected to offset a slight decline in cattle slaughter and push total 2020 beef production higher to new record levels. Beef production is likely, however, to be lower year over year by the fourth quarter of the year.”

For carcass weight perspective, the average steer dressed weight in January was 904 lbs., according to USDA’s monthly Livestock Slaughter report. That was 18 lbs. more than the same month a year earlier. The average dressed heifer weight of 833 lbs. was 9 lbs. more than a year earlier.

Last year, harsh, wet and cold weather hammered feedlot performance. Conversely, this year’s mostly open winter is boosting performance.

continued on page 56

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.” Snubbed to a different post, as Peel mentioned, commercial beef production this year will likely be record large, as will pork and poultry production.

“Total red meat and poultry production in 2019 increased to a record 105.2 billion lbs., the fifth consecutive year of increase,” according to Shagam. “For 2020, red meat and poultry production is forecast to increase over 3% to 108.8 billion lbs., driven by record production of beef, pork and broiler meat…Commercial beef production for 2020 is forecast to increase by about 1%, to a record 27.48 billion lbs.”

However, Good noted, “The balance of trade this year could easily take 50% of that production increase off the market, keeping our domestic supplies more manageable.”

Although still strong, U.S. beef exports last year were a touch softer year over year, before a number of trade deals were finally concluded. Even so, the export value per head of fed slaughter last year was $309.75, according to data released by USDA and compiled by the U.S. Meat Export Federation.

“U.S. exports (beef) are expected to increase to a record 3.3 billion lbs. in 2020,” Shagam says. “To the extent that lower production in competitor countries such as Australia and New Zealand is expected to limit their export potential, the United States will likely find lower competition in several key markets.”

Beef Expands Share of Consumer Spending

Along with the cyclical turn in cattle numbers, domestic and international consumers continue to pay increasingly more for beef than competing proteins, while buying more volume.

Total U.S. consumer expenditures for beef increased 4% to $111 billion last year, according to CattleFax. Projections call for another 2% increase this year to more than $113 billion.

That means more dollars to spread between industry sectors, according to Randy Blach, CattleFax CEO. From 1980 to 1990 Blach explained there was an estimated $32 per head profit, on average, to split among cow-calf producers, stocker operators, cattle feeders and beef packers. There will be nearly $500 to divvy up this year, according to CattleFax estimates. That would be among the most in history. “There is strong demand for our product, but that’s the result of the fact that our business has paid attention to market signals and we’ve been producing a consistent, quality product that has gained a greater piece of that retail dollar. We need to protect that,” Blach says. “We must pay attention to what the consumer is telling us. That means conversations about topics like traceability and sustainability only become more important as time goes on. We have to listen to the consumer and respond with action to meet their needs and demands if we’re going to continue to be successful in a hyper-competitive global protein market.”

ABOUT THE AUTHOR: Wes Ishmael has been involved with livestock publications since 1983. Wes grew up in Colorado and has always been in and around the livestock business. He now lives at Benbrook, Texas.

BULLS FOR THE FUTURE

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EDITOR’S NOTE: Considering the Limousin breed has been on this continent a little more than 50 years, the number of active families able to boast of four generations of involvement is about as rare as hen’s teeth. As one would expect, the stories and memories of those few families have developed more branches than the family trees themselves. That said, we would be doing the newest members of our breed a disservice to not at least attempt to cover a family journey as long, winding and interesting as the one we are about to attempt.

Most people who knew Don O’Brien thought of him as a savvy businessman; throughout his life he was involved in poultry processing, quarter horses, feed mills, banking and realty. More than a businessman, Don was a cattleman through and through.

Don O’Brien was introduced to the cattle industry in 1952, and bought his first Limousin cattle—seven halfblood heifers—in 1970. Those seven heifers set the standard for what would become a Limousin legacy that continues to this day.

In its heyday, O’Brien Farms in Pineville, Missouri, was home to 500 registered Limousin cattle and a 700-head Limousin-influenced commercial herd. Since 1971, the IO prefix has been registered more than 9,000 times with the North American Limousin Foundation.

“Dad went to Denver in 1973 and bought a bull named Rousseau. That bull threw really good females, that much I remember,” said Kathy Brooks, O’Brien’s youngest daughter.

Beginning in 1975, the O’Brien’s held annual production sales—a bull sale in March and a female sale in May. Those sales continued for many years before the O’Brien’s made the transition to selling cattle via private treaty.

In 2010, O’Brien Farms made the list as one of the North American Limousin Foundation’s Top 20 Breeders. According to NALF, the top 20 breeders at the time had, together, registered more than 7,000 Limousin and Lim-Flex calves. ‘

The Bruce and Kathy (O’Brien) Brooks family represent the second, third and fourth generations of O’Briens to make a lasting impact on the Limousin breed.

Kathy was just 13 years old when she bought her first two halfblood Limousin cows at a DeMier-Sudbrink sale in Miami, Oklahoma.

“My siblings and I showed our cattle statewide, around Missouri, for the most part, but my brothers David and Dick showed for O’Brien Farms nationwide,” Kathy said.

The O’Brien family collected many champion banners over the years and were named premier exhibitor at both the 1976 and 1977 World Limousin Futurity.

Don O’Brien served two terms as the president of the NALF board of directors. He was also the 1999 Missouri Limousin Breeder of the Year. “Dad absolutely loved Limousin cattle and stayed active in the breed as long as he could,” Kathy said. “He must have been in his seventies during his second term as president of the NALF board.”