Rebuilding the Herd: Experts Explain the Here and Now
Rebuilding the Herd 100923
For cattle producers across the U.S., a number of factors make the idea of herd rebuilding a bit less enticing.
According to USDA data, there’s nothing suggesting that cattle producers are in the process of rebuilding U.S. cattle herds, reports Michelle Rook on AgDay.
Whether it be high cattle prices or inflationary pressures, several factors are tipping the scales for producers to hold off expansion.
Feeder steer and heifer prices at some auction barns are up by over 55%, reports Clinton Griffiths, host of AgDay. Higher prices at the sale barn, helping pay off debt or restore equity drained by drought and high input costs, might be reason for some producers to continue delaying heifer retention.
Additionally, persistent drought has made it difficult to stabilize or rebuild the herd, notes Derrell Peel, livestock marketing specialist with Oklahoma State University Extension.
“As of early October, 40 percent of the U.S. is in some stage of drought with 23 percent in D2 (Severe) to D4 (Exceptional) drought. This includes regions where significant numbers of beef cows are located,” he explains.
With incentivized selling and many parts of cattle country still struggling with drought conditions, the idea of retaining heifers might be kicked further down the road.
In the latest cattle on feed report, placements were down 5% from 2022. However, placements of heifers versus steers are still running higher than normal, Rook reports.
“The last actual data we had was in July. The quarterly data showed at that point in time we had right at 40% of all the feedlot inventories were heifers. That's a level that goes all the way back to 2001, since it's been that high of a proportion,” Peel explains.
Meanwhile, inflationary pressures, such as high interest rates, will likely cause producers to move more slowly and cautiously before jumping into heavy heifer retention, says Scott Varilek, broker with Kooima Kooima Varilek Trading Inc.
“With the interest rates staying higher and going to stay higher out into the future, there's got to be some serious incentive and some serious confidence that this market can stay at a high level,” Varilek adds. “If you're looking to expand in the beef industry, it is going to take a large dollar amount and you're going to have a lot of risk.”
The process of rebuilding the cattle herd also takes considerable time, Rook notes, and it looks like it’s being pushed off until 2024.
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