Cattle in pasture

Analysts say cattle herd expansion has leveled off after a challenging stretch.

Evaluating 2019 trends in cattle herd size starts by noting how much more favorable conditions are this year compared to last summer.

Lee Schulz, Extension livestock marketing economist with Iowa State University, says dryness concerns are minimal this season, compared to the drought half the country experienced last summer.

“There are much better conditions this year,” he says.

Last year’s drought followed a cold spring that limited early forage growth, so producers had a hard time getting through the winter with enough hay.

“This growing season, May 1 hay stocks were at the second-lowest level since 1973,” Schulz says.

The only year with lower hay stocks during that time was May 1, 2013, coming off the historic 2012 drought year. The historically low hay stocks are related to both the weather and to shrinking hay acreage through the years.

Schulz says some areas were more affected by drought than others, so some areas had to sell off more cattle.

“We know the drought situation last year was very state- or region-specific,” he says.

Rusty Lee, who farms in Montgomery County and works as a University of Missouri Extension ag economist in east central Missouri, says he doesn’t know of any producers who had to sell all their cattle, but it was a challenging stretch.

“I don’t know of anybody that did a mass selloff,” he says. “I think most people managed to get through. I think there were some fence rows that got cleaned out. All the old hay is gone.”

Missouri beef cow numbers declined by 1%, and Colorado numbers declined by 2%, Schulz says, an example of two areas hit hard by the situation. This is based on the annual Jan. 1 cattle numbers report, which includes state-specific totals.

“January numbers for those states were down some,” he says.

Schulz says the July 1 cattle report doesn’t break the numbers down state-by-state, but he says the national picture shows cow numbers have largely been replaced, and the overall trend of herd expansion has leveled off.

“Expansion is over, and we’ve probably realized the peak of cattle numbers,” he says. “Some of that is related to forage, even though we’ve had a lot of forage growth.”

The forage shortage helped slow the growth. Schulz says there is a sizeable quantity of forage now, but there are some quality concerns due to the difficulty getting hay cut with wet forecasts.

Rusty Lee says there has been a lot of forage in his area, but it has quality concerns as well.

“The struggle has been making quality hay, with the rains every four days,” he says. “I’ve been helping producers understand the need to use some supplements.”

Declining calf prices and tighter margins also contributed to the leveling off of herd expansion, Schulz says. Over the long term, demand is key.

“Demand will ultimately dictate how high we can grow those numbers,” he says.

Exports are a big part of that demand.

“Exports are very important for the cattle industry,” Schulz says. “We export roughly 12% of our production of beef. Exports really serve that role, adding value to products that don’t have much value here. Why we’ve had such strong feeder cattle and fed cattle prices has been due to exports.”

Schulz says it is difficult to maintain the rate of export growth the U.S. beef industry had been seeing, although to-date 2019 beef exports are still up 4% over last year. He says there has been stiff competition for global markets, and ongoing trade negotiations have been a factor.

There have also been domestic pressures on profit margins.

“We’ve certainly seen prices for calves and feeders hit that summer swoon and decline,” Schulz says. “I think there is some opportunity as we get toward fall.”

Lowering feed costs could help producers later this year.

“We’ve seen some demand in the corn prices, and that’s helped support cattle prices,” Schulz says.

While this year might not be especially profitable, there could be better things ahead.

“As we look at 2019 for cow-calf producers, it pretty much looks like break-even levels,” Schulz says, “with the potential for a little better in 2020.”


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