Declining beef and pork production may offset increased broiler production and lead to a decrease in total meat production in 2022. This would be the first decrease in total meat production since 2014.
If drought conditions persist, feedlots may continue to borrow against the future with early weaned calves available through the spring and summer before facing the full reality of tighter feeder cattle supplies.
Feeder cattle markets have been in transition for several months and more transition is ahead. A strong uptrend in feeder prices is now reflected in Feeder futures prices, which may offset typical seasonal patterns.
Warmer temperatures, low humidity, dry conditions and wind mean that wildfire risks are very high now. The drought conditions impacting the region will become much more apparent in the coming weeks.
Beef demand has been strong up to this point but clearly there are more concerns about demand and input prices going forward. There is little choice but to stay tuned and try to remain as flexible as possible.
If drought is not a limitation in 2022, will cattle producers continue herd liquidation? The answer will be determined by what cattle producers want to do and can do relative to cow culling and heifer retention.
Drought will be the principal determinant of the general cattle industry scenario in 2022. The current Climate Prediction Center drought outlook suggests drought may persist in regions of the west and northern plains.
How can feedlot inventories be above year ago levels if the calf crop has declined the past three years? The usual flow of feeder cattle over time would suggest that feedlot inventories should have peaked in 2020.
Drought is expanding in the country. There is plenty of time to avoid widespread drought impacts but without significant moisture in the next 2-3 months, the cattle industry could see major impacts.
