Category: Livestock Marketing

In the previous SAT livestock article, Dr. Griffith asked about the girls’ whereabouts. Last week, the USDA/NASS released the 2022 Agricultural Census. Every five years, the Census takes a snapshot of U.S. agricultural operations. There is a wealth of interesting insights in the census data.  The data also sheds light on the structural changes in beef cow operations. The decrease in beef cow ranches could slow future herd expansion. 

Figure 1 highlights the decline in beef and milk cow farms. Between 2017 and 2022, 106,844 beef cow ranches disappeared, a 15 percent drop. In the same period, milk cow farms decreased by 34 percent. In contrast to the 2012 drought, we have fewer beef cow ranches to rebuild the herd, making it more challenging to find our girls. The contractions in cow farms are steeper than the overall number of farmers, which has declined by 6.9 percent, according to USDA/NASS. 

Figure 1 – Number of Cow Farms: 2002 – 2022.

Although there has been a decline in beef cow farms, the Census has reported an increase of 1,034 ranches with more than 500 head (Fig. 2). From 2017 to 2022, the beef cow herd has decreased by 2.5 million head. However, there has been an increase of 839,603 head in farms with more than 500 head. It indicates industry consolidation, providing insights into where we may find our girls.   

Figure 2 – Number of Beef Cow Farms by Herd Size: 2017 – 2022.

Beef cow farms shrunk across all farm size categories (Fig. 3). Most beef cow ranches are between 10 and 49.9 acres. Between 2017 and 2022, this category displayed the smallest drop, 9 percent, showing its resilience. But, during this period, the extremes recorded the most significant declines, producers with 1 to 10 acres declined by 23 percent, and 1000 to 2000 acres ranches declined by 20 percent. Regardless of the production scale, environmental, and economic factors affected beef cow ranches’ survivorship.

Figure 3 – Number of Beef Cow Farms by Herd Size: 2017 – 2022.

The 2022 USDA/NASS Agricultural Census reported a decline in beef cow operations from 2017 to 2022.  The census also reported some growth in larger operations.  The effect of fewer total operations on the speed of herd rebuilding remains to be seen.

---

Calil, Yuri. “Ag Census Reveals Fewer Beef Cow Farms.” Southern Ag Today 4(8.2). February 20, 2024. Permalink

One article on cattle inventory just will not suffice given the extremely low inventory. This article will try to address the same question a bunch of college guys have at a party with no females. Where are all the girls? When will they get here? The values can be dissected in a number of ways, but being elementary may be the best route.

Total beef cow inventory was estimated to be down 716,000 head compared to the previous year with most of that decline coming from the Great Plains and the Southeast United States. This decline was largely drought influenced as widespread drought reduced late summer and fall forage production and resulted in many producers being forced to feed hay earlier than is typical. Thus, it is fairly easy to know where all the young girls are. One simply has to look at the quantity of heifers on feed. Clearly, the feedlot is where most of these young females reside. As it relates to more mature females, beef cow slaughter in 2023 tells most of the story for the beef cow herd. The industry has harvested a large quantity of beef cows.

Figure 1 contains information concerning the quantity of beef heifers retained for replacement. Heifers held as beef cow replacements have been extremely low for two consecutive years, which means it will be difficult to grow the beef cow herd much in 2024. In reality, most heifer replacement decisions will not be made by spring calving producers until the second half of the year and it will be two years before any of those retained females have a calf old enough to enter the feedlot.

The final thoughts here are that most females have been on a dinner plate, are on a dinner plate, or destined for a dinner plate. Cattle producers will begin to make heifer retention decisions. One would suspect there will be some aggressive decisions to retain females in the coming years, but significant retention will be slower than many may think.

Figure 1. Beef Heifers Held for Replacement

---

Griffith, Andrew. “Where are the Girls?” Southern Ag Today 4(7.2). February 13, 2024. Permalink

USDA released the annual Cattle inventory report on January 31^st.  Here are some thoughts and reactions to the report from our SAT livestock economists.

Kenny Burdine – University of Kentucky

The decrease in beef cow numbers during 2023 was very much in line with expectations – cattle supplies will remain tight. The percent decrease in heifer retention was smaller than what was estimated from 2022 to 2023, but the numbers retained was still lower. Unless there is a major drop in cow culling during 2024, it is hard to imagine the cowherd being larger in 2025. Put simply, the supply picture remains very bullish and futures markets responded positively on the day after the report.

Consistent with monthly estimates, January 1 on-feed inventory above (+1.6%) year-ago levels due to timing of placements, live cattle imports, heifers on feed, and increases in the number of days on feed in the latter part of 2023. This will likely change over the course of 2024.

I was surprised by the small increase in beef cow numbers in Kentucky. Based on cows moving through auction yards and impressions from my Extension travel, I fully expected another decrease in beef cow inventory. In fact, Kentucky was the only top 10 beef cow state that saw a year-over-year increase. Over the last few years, I have sensed a bit of a transition away from cow-calf interest and more towards backgrounding and stocker cattle. We have also lost a good deal of pasture ground to row-crops (and some to development) over the last several years, which is also relevant to the discussion.

Will Secor – University of Georgia
Georgia’s all cattle and calves inventory followed the national trend, dropping by 2% year-over-year. The number of beef replacement heifers stood out as they are down by about 5.5%, much more than the aggregate number. This is also a bigger drop than the number of beef cows that have calved (down 4%). These not only point to a lack of a turnaround, but that herd expansion may be slower as we start from an even smaller base when the rebuild does start.

Max Runge and Ken Kelley – Auburn University

Alabama’s Cattle and Calves January 1, 2024, inventory was 6.4 percent lower than January 2023. This is the fewest number of cattle in the state since 1943 and the largest percentage decrease in 20 years.  Dry weather, lower hay availability, and poor winter grazing growing conditions (record low temperatures at the end of 2022 and a dry fall in 2023) have contributed to fewer cattle on farms.  Beef cow replacement heifers were 10 percent fewer than the year before.   Alabama dairy cattle inventory remained the same as the previous year.

Hannah Baker – University of Florida

Florida numbers for beef cattle declined by 3% from 888,000 to 862,000, but we are still ranked number 9 in beef cow production as decline in the top 8 states ranged from 2%-6%, with the exception of KY. The number of replacement heifers also declined by 4% in Florida, indicating that most producers are not rebuilding yet. The start of expansion in Florida will depend on the current and future management of forage and the timing of La Niña’s appearance. With the majority of Florida producers being in cow-calf sector, the focal point will be on feeder calf prices, and they certainly have not peaked and are not expected to peak at least over the next couple of years. Additionally, the value of female cattle will continue to rise once expansion becomes reality. The open-ended question: is the national cattle herd still declining or will we start seeing stabilization in 2024? Will producers continue taking advantage of high prices instead of rebuilding? 

David Anderson – Texas A&M AgriLife Extension Service

Texas’ beef cow herd declined by 4.3 percent, to 4.115 million head.  While the national cow herd eclipsed the lows following the drought of 2010-2012 there are more cows in Texas than following that drought (4.1 million in 2024 compared to 3.9 million in 2014).  More beef heifers were held back for herd expansion than the prior year.  

Anderson, David, Kenny Burdine, William Secor, Max Runge, Ken Kelley, and Hannah Baker. “Thoughts on the Cattle Inventory Report.” Southern Ag Today 4(6.2). February 6, 2024. Permalink

After almost a full month into the new year, cattle prices and wholesale beef values are up across the board.  

Steer calf prices across the South and Southern Plains have kicked off the year higher.  Steers weighing 5-600 pounds have increased from $246 per cwt in early January to $254 nearing the end of the month.  In the Southern Plains, the same weight calves hit $300 per cwt, up from $284 to begin the year.  In both market areas, prices are 40 percent higher than they were at this time in 2023.  It’s worth remembering that prices in early 2023 had not yet experienced the sharp increase, that came mid-year, so we are comparing against a low base but, prices have advanced from December 2023.  Prices for these weight steers do tend to increase seasonally from the first of the year through March but, these price increases represent a much more than normal seasonal increase.

Heavier feeder steers across the South have increased at a more modest pace, up about 3-4 percent during January.  Higher prices buck the normal seasonal pattern of 7-800 pound steer prices that typically decline through March.  Heavy feeder prices are typically pressured by increased sales of cattle that have finished grazing wheat pasture.  

Fed cattle have climbed a few dollars, finishing last week at about $174 per cwt.  Fed cattle prices do tend to increase in the Spring seasonally, but  it’s a little early for a Spring rally.  There are about 2 percent more cattle on feed than last year, and those increased numbers may limit some price increase.  Good consumer demand in the presence of retailers who have purchased less beef for future delivery than last year could set the stage for an even better price rally.

On the beef side, the Choice beef cutout value hit over $300 per cwt last week, that’s up over $20 per cwt since the year began.  The increase appears to be led by chucks and rounds and ground beef.  

January shows a promising start for cattle prices this year.  Fewer calves, cattle, and beef production has set the stage for even higher prices later in the year. 

Preview – on Wednesday afternoon USDA will release its annual Cattle inventory report.  Next week’s SAT will focus on what stood out from the report to our livestock economists in the South.

December 1st hay stocks and 2023 production were included in the annual Crop Production Summary released recently by USDA. This report gives the best estimates of the amount of hay available for the winter at the state level.

For this article I’ve focused on states in the Southeastern region excluding Oklahoma and Texas. The 11 states included are AL, AR, FL, GA, KY, LA, MS, NC, SC, TN, and VA. These states represented 18 percent of total U.S. hay production during 2023. I’ve excluded OK and TX only to prevent their large totals from overshadowing the dynamics in the rest of the southeastern region. Hay production in OK and TX is up a combined 42.5 percent with OK hay stocks almost double 2022 levels when the states were suffering from severe drought. 

Despite 2023 production increasing by 4 percent over 2022 in this 11-state region, the estimated December 1 hay stocks dropped 1.1 percent and were at the lowest level since 1988. 2023 is only the 3rd time since 1986 that hay stocks decreased in a year when production increased for this region which would indicate that more hay was used or transported to another region sooner than usual. For comparison, total U.S. hay production increased by 6.3 percent and December 1st hay stocks were 6.9 percent higher than in 2022.

There were noteworthy state-level differences within the region as shown in the maps below. While some states experienced increases, AL, LA, and MS all saw decreases in production in 2023 and also saw significant decreases in December 1 hay stocks. This is likely no surprise as these states were impacted severely by the drought conditions that developed and persisted through the second half of 2023. Producers in these states had generally lower production and had to start feeding hay sooner when pasture conditions deteriorated.   

Lower hay stocks in some states have implications for heifer retention and cow culling decisions. Producers already facing high input costs are less likely to carry cows or heifers through the winter when hay supplies are low. It will be interesting to see the differences in inventory across states when the annual January 1 Cattle Inventory Report is released on January 31st.

Maples, Josh. “Lower Hay Stocks in Some of the Southeast for Winter.” Southern Ag Today 4(4.2). January 23, 2024. Permalink