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NATIONAL CATTLEMEN
Charting the Course for the Beef Cow Herd
Million Head
back to the breeding herd in time to be exposed By Patrick Linnell Beef Cow Inventory 34.0 this spring. However, that is an unlikely scenario Director of Cattle Market Research, CattleFax 2022 30.1 mil. -2.3% 33.5 at this point. Even as the La Niña pattern weakens Cattle cycles can have long tails, and that is 2023 28.9 mil. -3.6% and brings improved moisture, current forecasts shaping up to be the case this time around. The 33.0 F2024 28.6 mil. -1.1% indicate it won’t be quick or wide enough. latest USDA Cattle Inventory report showed the 32.5 F2025 28.5 mil. -0.7% That leaves this fall as the next major nation’s beef cow herd declining below the prior F2026 28.8 mil. +1.4% 32.0 opportunity for producers to retain heifer calves, cycle low in 2014 to 28.9 million, the smallest 31.5 the more likely scenario considering the long road since 1962. to drought recovery in many areas. A spring-born Improved drought conditions combined 31.0 heifer calf retained this fall would first calve in with stronger prices and cow-calf margins will 30.5 2024 and be counted by USDA as a beef cow in eventually incentivize expansion. That much is 30.0 January 2025. Expect more heifer retention this nearly guaranteed. The more significant question 29.5 fall, but exactly how many will be a big factor in is how long the contraction continues and when whether the cow herd bottoms in 2024 or 2025. expansion can feasibly begin. It all comes down to 29.0 Downstream segments will especially need to cow culling and heifer retention. 28.5 pay attention to heifer retention trends. Calf crops The cow culling rate can change rapidly if 28.0 will continue to decline into roughly 2024. But forage, water and cash flow allow. While these 00 02 04 06 08 10 12 14 16 18 20 22 24 26 heifer retention will make the available supply of factors are all slated to improve substantially this Source: USDA feeder cattle and calves, and ultimately fed cattle year, they are not there yet. January finished with YEARS CattleFax Projection and beef supplies, even tighter yet. How much the highest culling rate for the month since 1986 but culling is forecast to fade sharply below year-ago levels by the fourth quarter of the tighter depends on exactly how aggressively producers retain heifers. Bottom line: From what is known today about heifer retention and cow culling, the year. Beef cow slaughter is currently forecast to drop 700,000 head in 2023. But that expectation is for a calf crop that bottoms in 2024 and a beef cow herd that bottoms would still be within liquidation territory at a culling rate of more than 11% primarily due to relatively large slaughter here in early 2023. in January 2025. Look for both to increase thereafter. This timeline could be shifted In terms of heifer retention, the ability to expand will be limited near-term by the forward or back by a year depending how expansion unfolds. Fed slaughter tends to smallest beef replacement heifer inventory since 2011. If drought improves in a big way follow the beef cow herd trends by about a year, depending on market signals and the soon, some heifers that are currently in non-replacement routes could still be diverted drought cycle.
Hay Supplies Paint Bleak Picture By Katelyn McCullock Director of Livestock Marketing Information Center The Dec. 1 hay stocks released by USDA NASS in January showed the U.S. continues to have very low supplies on hand, down 9% from 2021 and 6% below the next lowest value (2012). The volume of hay declines can be largely attributed to lower other hay production because of yield declines and smaller harvested acres of alfalfa hay. The U.S. hay number does not separate hay into types and provides the total by state for Dec. 1. This very low supply situation gives way to relative pessimism for livestock producers who in many parts of the U.S. have already endured record high hay prices and will very likely not see relief until well into harvesting season, if at all. Weather will play a critical role in how quickly hay prices come down, and across the Great Plains, the drought in Texas, Oklahoma, Kansas and Nebraska pulled hay from other areas last year, creating an even wider footprint than did the drought conditions. LMIC has hay prices remaining at or slightly below record high prices as it may take more than one good year of yields to ease hay prices. Competition for hay has been fierce in the last several years, and livestock producers are already talking of having a hard time finding hay to buy should they need it. One nuance to the hay market has at times been the export market and its role in competing for high quality hay. In early February, the USDA Foreign Agricultural Service (FAS) released the December data for 2022. The results showed that the alfalfa export market held even with last year, purchasing roughly the same quantity but
paying 16% more for U.S. alfalfa. China, which is the dominant force in the U.S. alfalfa markets, bought 5% more alfalfa but paid 20% more than a year ago. Saudi Arabia was another strong buyer, increasing purchases by 47% and paying almost double 2021’s value. Saudi Arabia is the third largest market for U.S. alfalfa trailing behind Japan. Japan pulled back purchases of alfalfa in 2022, down 16%, and value declined by 5%. South Korea, Taiwan and United Arab Emirates (UAE) round out the other largest destinations for U.S. alfalfa. They declined between 18-42% each, while values lost only 4-15% from the previous year. Other hay exports took a larger toll due to higher other U.S. hay prices, declining 14% in volume from 2021, but only 3% in value. All the top buyers reduced volumes: China, Japan, South Korea, Taiwan and UAE. China was the largest year-over-year change, down 52%, followed by UAE, down 36%. Values were lower as well but not by nearly as much. South Korea behaved the most like 2021, decreasing purchases only by 4% but paying 7% more than in 2021. In general, total hay exports represent close to 3% of total hay production; however, in short years that can be a much larger share. In 2022, total U.S. exports of alfalfa were equivalent to roughly 6.5% of total U.S. production versus 6.4% in 2021. Other hay exports were roughly 2% of production compared to 2.5% the previous year. Hay supplies will be touch-and-go for the first half of 2023, if not later, depending on spring moisture. Forage conditions and the potential for another year of drought will put the beef cow herd in another precarious position, and any weather troubles will very likely mean further culling. It’s been a difficult couple of years, and unfortunately, it’s too early to say if we are out of the woods yet.
PERCENT CHANGE DECEMBER 1 HAY STOCKS (2021-2022)
MA RI CT NJ DE MD
15 0 8 -9 10 9
$ Per Ton 290 280 270 260 250 240 230 220 210 200 190 180 170 160 150 140 MAY
US Total
ALFALFA HAY – MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year
JUN
JUL
AUG
SEP
OCT
Avg. 16/17-20/21
-9.0
Livestock Marketing Information Center
NOV
DEC
2021/22
JAN
FEB
Data Source: USDA-NASS
1/13/23
OTHER HAY – MONTHLY AVERAGE PRICE Received by Farmers, U.S., Crop Year
PERCENT CHANGE OTHER HAY ACRES (2021-2022)
$ Per Ton 190 MA RI CT NJ DE MD
10 0 13 13 13 6
APR
G-P-12 01/31/23
Livestock Marketing Information Center
Data Source: USDA-NASS
MAR
2022/23
180 170 160 150 140 130 120 110
US Total
Livestock Marketing Information Center Data Source: USDA-NASS
MAY
JUN
JUL
AUG
SEP
Avg. 16/17-20/21
-2.4
1/13/23
Data Source: USDA-NASS Livestock Marketing Information Center
OCT
NOV
DEC
2021/22
JAN
FEB
MAR
2022/23 G-P-13 01/31/23
APR