Drought Stimulates Slaughter
DR. ANDREW P. GRIFFITH
KNOXVILLE, TENNESSEE
Despite cattle prices reaching record levels, prices alone cannot drive herd expansion. In fact, climatic conditions can easily trump financial and economic drivers. This statement is supported by continued strong beef cow slaughter and heifers being placed on feed. Thus, it may be beneficial to evaluate beef cow slaughter and heifer movement throughout the United States.
There are ten regions of the United States in which cow slaughter is recorded. The regions to be focused on here include Region 4 (AL, FL, GA, KY, MS, NC, SC, TN), Region 5 (IL, IN, MI, MN, OH, WI), Region 6 (AR, LA, NM, OK, TX), and Region 7 (IA, KS, MO, NE). Based on weekly federally inspected slaughter data from January through the middle of September, beef cow slaughter in 2023 is down 7, 15, 21, and 3 percent for regions 4, 5, 6, and 7, respectively, compared to the same time period during 2022.
At first glance, these percentages appear to be rather large declines in beef cow slaughter. However, this 273,100 head decline year-over year across these four regions would still point toward beef cow herd liquidation due to a much smaller beef cow herd. Simply comparing beef cow slaughter in these four regions with the national beef cow inventory as of January 1, federally inspected beef cow slaughter from January through the middle of September 2023 is 8.4 percent of January 1, 2023 beef cow inventory. Similarly, beef cow slaughter over that same time period in 2022 represented 9.5 percent of January 1, 2022 beef cow inventory. A decline in percentage should be expected given stronger calf prices, but drought conditions are causing continued liquidation in these major cattle producing regions.
It is also important to consider heifers held for beef cow replacement and the quantity of heifers entering the feedlot. Based on the July 1 Cattle Inventory report, heifers held for beef cow replacement as of July 1 totaled 4.05 million head. This is the lowest quantity of heifers held for beef cow replacement over the history of the July 1 report, which dates back to 1973.
Further support for failure to grow the beef cow herd through heifer retention is the quantity of heifers in feedlots. Based on quarterly data, the quantity of heifers on feed as of July 1, 2023 was unchanged from the same time period in 2022. The July quarterly information does not provide the clearest picture in that some of those cattle could have been placed in late 2022, but most of them would have been placed on feed in 2023. The third quarter report will provide a clearer picture of what is happening from the heifer retention side of the business.
Given the beef cow slaughter data and heifers placed on feed number, there is no reason to believe beef cow herd expansion has started. By the time this article is published, some producers could have certainly started to retain some of the fall weaned calf crop to bread in 2024. However, those females will not have a calf until 2025, which means beef production will not increase until at least 2026. This would seem to indicate cattle prices should be supported from the supply side for at least the next three years. But, there has still been little relief from drought in many of the major cattle producing regions. This means the inability to retain heifers in these regions will push heifer retention another year down the road and may result in more beef cow slaughter.
This was a long-winded explanation to say it is difficult to know when beef cow herd expansion will begin and further influence the market. What is for certain is that producers have little to no control over the factors influencing continued liquidation. There must be a plan for the cattle industry that I have yet to fully understand, but I have faith things will work out for good. ∆
DR. ANDREW P. GRIFFITH: University of Tennessee