Center Cattle Report
signs were everywhere of a slowing in the growth of the national beef cattle
herd. Cow slaughter is up – running 15-20% above last year. Those cows
held back for one more calf, during the period of record high calf prices,
are now being culled from the herd. Rational exuberance is gone and breeders
are back making economic decisions regarding herd sizes based on current
conditions and inputs.
breeder is at the start of the beef production cycle and ultimately either
suffers the pressures of overproduction of benefits of underproduction.
The other participants in the beef chain are all middle operators, buying
and selling on margins that sometimes exists and sometimes are lacking.
When prices fall, everything is pushed back to the breeder.
calf prices are well under the highs of three years ago, they are seeking
a sustainable level for stable production and herd size. Confirming the
slowing in herd grow is the number of heifers being placed on feed in the
nation’s feedlots. Double digit increases over prior year have been posted
for the past year and now heifers as a percentage of total slaughter numbers
is showing large increases. This is positive for fed cattle prices and
average carcass weights because heifers are marketed at lower out weights.
Steers remain almost 2/3 of the daily fed slaughter.
weighted average annual fed cattle price in the $120s would have a stabilizing
influence on the size of the national cow herd. This would allow yearlings
to sell in the $150s and calves in the $170s giving each sector of the
beef production cycle reasonable pricing. Genetics will always push weaning
weights higher helping breeders, but breeders also must fight higher inputs
costs on other fronts such as medicine costs, interest rates and feed costs
not including rising cost of cattle care.
and feed cost always play the role of outside uncontrollable influences
on both price and production levels. Corn at $3.50/bushel will eventually
discourage corn production and prices will rise. Regional drought pockets
like the Dakotas, Wyoming and Montana will always exist. This simply means
herd numbers will forever be dynamic depending on many factors of that
often are beyond our control.