Beef cow herd liquidation occurred in a major approach in 2022 attributable to a mix of sturdy lean beef demand, larger cull cow costs, and forage points attributable to drought. Fewer cows ends in fewer feeder cattle, tightening provides for fed cattle, and in the end decrease beef manufacturing in 2023. The USDA-NASS Cattle Stock report is launched on the finish of this January and analysts’ estimates for beef cow discount are within the 3-4% vary. This may instantly have an effect on feeder cattle numbers in 2023.
A herd of 100 cows with 90% breeding effectivity and non-sexed semen could be anticipated to have about 90 feeder cattle to promote (45 steers and 45 heifers). On common, cows keep in a herd for about 5 years so this herd could be anticipated to have bought 20 cows in 2022.
To take care of long-term feeder cattle output, the herd should both retain or purchase 20 heifers that shall be bred within the coming yr. Producers make tradeoffs between both promoting or retaining extra heifers. Promoting extra heifer calves right this moment will decrease future feeder cattle manufacturing however improve operational earnings right this moment whereas retaining extra heifers will lower present earnings whereas rising future feeder cattle manufacturing.
Thus, feeder cattle manufacturing in 2023 is a results of each heifer retention and cull cow sale selections throughout 2022. The USDA-NASS Cattle Stock report launched on the finish of January will point out what number of heifers have been held again in herds. This may primarily have an effect on feeder cattle numbers in 2024.
Every quarter, along with their month-to-month cattle on feed report, USDA-NASS releases the entire variety of cattle, steers, and heifers on feed for the US and 13 major states. During times of contraction, heifer placements into feedlots, as a share of complete cattle on feed, is excessive and during times of herd rebuilding, it’s low (Determine 1). At present, that share is 39.74% – the best share since 2002. That is the primary indicator that heifer replacements will lower in 2023.
Combining the historic quarterly share of heifers on feed and cattle stock report can present an indicator of what number of heifers shall be held again for substitute within the 2023 report. If the share of heifers on feed throughout 2022 is excessive, then we might anticipate a lower within the variety of heifers retained for breeding in 2023. Determine 2 reveals this relationship and implies that the change in heifer retention may very well be roughly a 4-4.5% lower within the January Cattle Stock report.
However what indicator is there that this pattern of heifers on feed will proceed sooner or later? Every week the USDA-AMS releases a abstract report of all of the feeder cattle which might be bought by weight, intercourse, and advertising methodology. Utilizing this we are able to see the pattern of heifers weighing greater than 600 lbs. which might be bought all through the US. After accounting for historic seasonal adjustments, the pattern of accelerating heifers as a share of cattle on feed must be slowing (Determine 3). This pattern started to shift within the latter a part of 2022. This offers some proof that whereas heifers held again for substitute could also be decrease within the January 2023 Cattle Stock report, herd rebuilding might start to happen severely throughout 2023. Nevertheless, the true extent of the rebuilding possible is determined by the climate, general beef demand, and enter prices.
So what does the mixed impact of accelerated beef cow harvest and lowered heifer substitute selections imply for herd liquidation and costs acquired? Briefly, the availability of feeder cattle must be much less in 2023 in comparison with 2022. The CME futures appears to assist this concept with Fall 2022 deferred contracts buying and selling within the $200-210’s vary. For locations like Nebraska which typically has a +6.00 foundation within the Fall for 700-900 lb. steers, anticipated money costs are projected to be roughly $210-220. For context, 700-900 lb. steers bought between October-December in Nebraska averaged roughly $169 per cwt. in 2013, $240 per cwt. in 2014, $181 per cwt. in 2015, and $185 per cwt. in 2022.
Supply: College of Nebraska-Lincoln
