Beef Herd Expansion Slows Due to Drought Conditions
Expansion of America’s cowherd shows signs of stalling. Total beef cows in the U.S. were 2% higher on Jan. 1, 2018, at 31.7 million, representing the largest number since 2008. Breeding cattle inventories, however, signal a decrease in the rate of expansion, while drought in the southern and central Plains could shift the cycle into reverse.
The USDA–National Agricultural Statistics Service (NASS) Cattle Inventory report counted 94.3 million cattle and calves Jan. 1, an increase of less than 1% compared to a year ago. (See an interactive ranking of states here.)
“The cattle cycle is pretty well on track,” Randy Blach, CEO of CattleFax, told attendees at the CattleFax Outlook Seminar during the Cattle Industry Convention and NCBA Trade Show in February. “We saw the USDA numbers released yesterday that indicated the herd expanded again in 2017. We expected that would be the case. But it is slowing down. The herd expansion is slowing down, and it looks like we’ll be at our peak cattle inventory numbers in 2019 or 2020.”
Beef cow numbers increased 510,000 head in the Jan. 1 report, which was about half the increase seen last year, when NASS reported a 3% increase. Since 2015, ranchers have added 2.4 million beef cows to their herds, a 7.7% increase.
The expansion is a sign of good times, says Sterling Marketing president John Nalivka, Vale, Ore.
“Expansion is the result of profits and ample forage supplies,” he says. “While profits have eroded from the peak of 2014 and 2015, range and pasture conditions throughout much of cattle country have supported herd expansion. That may change this year.”
Drought and smaller breeding inventories signal peak cycle numbers are near
That’s because drought quickly spread across much of cattle country this past fall and intensified during the winter. Texas for instance, hammered by Hurricane Harvey in September, fell into a lengthy dry spell almost immediately thereafter. The National Weather Service reported areas of the Texas Panhandle didn’t record measurable precipitation for more than four months after Oct. 13, 2017. For Amarillo, that smashed the city’s previous record streak of 75 consecutive days ending in early January 1957.
The epicenter of the current drought rests over the Texas and Oklahoma Panhandles and southwestern Kansas, but extends into every state from the Gulf of Mexico to the Canadian border. That 14-state area is where 60% of America’s cowherds reside, and continued drought means herd reductions could begin soon.
Drought, however, has already influenced beef production and 2018 cattle prices. Winter wheat grazing was poor, pushing cattle to feedyards earlier than planned. That led to larger feedyard inventories that could shift slaughter and production patterns in 2018.
The Jan. 1 cattle on feed report totaled 14.0 million head, up 7% or 939,000 head larger than the same period in 2017, and the largest on feed number since 2012.
“Beef production will be up 6% compared to 2017,” Nalivka says. “That is the result of herd expansion and growing production efficiencies.”
In 2017 the U.S. beef industry produced 745 lb. of beef per cow, and Nalivka projects that number to rise to 774 lb. per cow in 2018, a 4% increase. Those numbers compare to 416 lb. per cow in 1975, which means today’s industry is producing almost the same total number of pounds of beef with one-third fewer cows.
“In addition to more beef, we’ll see 5% more pork and 2% more poultry this year, which will bring total per capita red meat and poultry supplies to 222 lb.,” Nalivka says. “That will be a new record.”
