Cattle cycle factors indicate prices should continue at mostly current levels
Thursday, March 7, 2019
There was a delay in getting certain data relative to the nation’s cattle industry while the federal government was shut down, but the numbers are in and are showing herd expansion may be stalling out.
“While cyclical expansion may be mostly complete, there is no indication of herd liquidation at this time; in fact, the level of beef replacement heifers is large enough to support a minimal level of additional herd expansion in 2019, if all breaks right,” said Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist.
Average cattle prices are expected to continue at mostly current levels and seem likely to hold cattle numbers steady in 2019.
“Future market conditions, good or bad, could prompt additional expansion or liquidation in 2020 and beyond,” Peel said. “From an operational perspective, it is important cattle producers continue monitoring domestic and international market conditions to see whatever new direction emerges in the coming months.”
The Jan. 1 inventory of all cattle and calves in the United States increased to 94.76 million head, up 0.5 percent from one year ago.
“This puts the number of cattle in the nation just slightly higher than 2009 levels after dropping to a low of 88.53 million head in 2014, with an increase of 6.23 million head in the last five years,” Peel said.
The Jan. 1 inventory of beef cows was 31.77 million head, up 1 percent year over year. The 2018 beef cow inventory was revised down to 31.47 million head, meaning beef cow herd growth in 2017 was 0.8 percent. The beef cow herd on Jan. 1 of this year is nearly equal to the 2009 level of 31.79 million head and has increased by 2.68 million head from the 2014 low of 29.09 million head.
U.S. Department of Agriculture data indicates the nation’s dairy cow herd was 9.35 million head on Jan. 1, down 0.8 percent year over year. Beef and dairy cows combined for a total cow herd of 41.12 million, up 0.5 percent from last year. The 2018 calf crop was 36.40 million head, an increase of 1.8 percent from 2017.
The inventory of beef replacement heifers was 5.93 million head, a decrease of 3 percent from last year. Beef replacement heifers as a percent of the beef cow herd on Jan. 1 was 18.7 percent.
“This ratio is down from 19.4 percent one year ago as heifer retention moves closer to levels consistent with zero herd growth,” Peel said. “A record heifer retention level occurred in 2016 with beef replacement heifers at 21 percent of the beef cow herd. This ratio has averaged 17.8 percent over the past 30 years.”
Dairy replacement heifers were down 1.4 percent to 4.7 million head on Jan. 1. The USDA report also indicated the number of cattle on feed in the United States was 14.37 million head, an increase of 1.6 percent year over year.
“The inventories of steers weighing more than 500 pounds, other heifers weighing more than 500 pounds and calves weighing less than 500 pounds – adjusted for the cattle on feed inventory – results in the estimated feeder cattle supply outside of feedlots,” Peel said. “On Jan. 1, this estimate was 26.38 million head, up 1 percent year over year.”
Peel added the larger 2018 calf crop and resulting increase in estimated feeder supplies mean feedlot production will remain higher in 2019, leading to increased beef production yet again in 2019. The slightly larger 2019 cow herd implies the 2019 calf crop will be as large or slightly larger year over year and should maintain feeder supplies through 2020.
Cash receipts for cattle in Oklahoma exceed $3.7 billion annually, according to USDA National Agricultural Statistics Service data. Oklahoma is the nation’s 4th-leading producer of cattle and calves.
The Oklahoma Cooperative Extension Service is one of two state agencies administered by OSU’s Division of Agricultural Sciences and Natural Resources, and is a key part of the university’s state and federally mandated teaching, research and Extension land-grant mission.