CATTLEFAX TRENDS
BEEF COWHERD TRENDS The two primary factors that influence cattle cycles are profitability at the cow-calf segment and drought or grazing conditions. The U.S. beef cowherd peaked in January 2019 just shy of 31.7 million cows. Black swan events and poor leverage causing margins to deteriorate were the main reasons cow numbers dropped over 500,000 head from 2019 to 2021. Now, the other important variable has intensified significantly over the last eighteen months. The following discussion will cover what that means to inventory numbers and the resulting long-term implications. West of the Rocky Mountains and the Northern Plains have dealt with the worst drought, creating poor grazing conditions for cow-calf operations. Unfortunately, this has led to some dispersals and/or producers having to cull very deep into the cowherd. While the current drought covers a large land mass, it is important to put into perspective roughly how many cows are impacted. According to January 1 state cattle inventory numbers and the NOAA drought monitor, 28% of the U.S. cowherd was in moderate or worse drought, on average, from January through September 2021. Since 1975 there were only 11 other years that saw a larger percent of the cowherd
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January 2022
in moderate or worse drought during the first nine months of the year. The most recent year was 2013, during one of the worst droughts in history. With over one-fourth of the U.S. cowherd currently impacted by moderate or worse drought, and conditions deteriorating in parts of the South Plains in recent months, another year of liquidation is certain. This is further supported by year-to-date beef cow slaughter that is up 242,000 head, or 10%, compared to last year through September. CattleFax expects the beef cowherd to be down another 400,000 head in January 2022, for a total of roughly 30.75 million. It is common for a La Niña weather pattern to create dry conditions for much of the major grazing regions, as seen over the last year. Unfortunately, recent forecasts show there is risk La Nina conditions will remain into, and possibly through, spring 2022. Some regions, especially the North Plains and Southwest, that are already dry are predicted to receive average to below average precipitation next winter and spring. As if producers aren’t already dealing with enough challenges in the present, it is important to understand forage availability may continue to be extremely limited for the next several months. While the weather forecast can change, and everyone is hopeful for improvement, under the current assumptions that dry conditions continue, further cowherd liquidation is essentially a guarantee through 2022. It is fairly easy to make the case that the cowherd could decline an additional 200,000 to 300,000 head by January 2023, to find a bottom near 30.5 million cows. Another factor supporting continued liquidation through 2022 and reporting a smaller beef cowherd number in January 2023 is the amount of heifer calves and feeders currently being marketed across the country. Through the middle of October, heifers as a percent of all U.S. feeder and calf receipts averaged 41.3 percent. Last year, heifers
