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Dairy-beef crossbreds have big impact on beef industry

Fran O’Leary Beef bulls
MORE CROSSBREDS: Kevin Good of CattleFax says a lot of dairy farms, especially large dairies, are breeding the bottom half of their herd to beef bulls. He thinks the trend for dairy-beef crossbreds will continue to increase in coming years.
Dairy-beef crossbreds are expected to reach 3 million head in the U.S. in 2022.

According to Kevin Good, vice president of industry relations and analysis at CattleFax, the current U.S. beef cow herd is 650,000 head smaller compared to July 1, 2020.

“We are in the middle of a liquidation of beef,” Good said during a webinar held on July 30 sponsored by Zoetis.

He noted a lot of beef cattle today are dairy-beef crossbreds.

“From a big-picture view, dairy is playing a much bigger role in the production of beef,” Good explained.

According to Good, demand for U.S. beef declined in the 1980s and 1990s.

“Since the late 1990s, demand for beef has increased substantially,” he said. “Beef demand now is the best it has been in the past 30 years.”

Drought impact

Why is the beef herd declining when demand and prices for beef are high?

Good blames it on drought. “Thirty percent of the beef herd is in a drought-stressed area of the country,” he explained. “Without the feed, we’re going to continue to liquidate.

“We’ve had two years of liquidation, and we think that will continue this year, through 2022 and into 2023.”

According to Good, 180,000 head of beef cattle will be liquidated in 2021, another 400,000 in 2022, and 250,000 more in 2023.

“Hay and corn prices are both elevated,” he said. “Without the feed, we are going to continue to liquidate. Female slaughter is up 10%. We think we will have adequate corn and lower corn prices in 2022.”

Good said calf values are going up.

While beef slaughter is accelerating, the dairy herd expanded by 500,000 head during the past 20 years.

“It’s up 11.9% to date,” he said. “Large dairy operations are expanding due to economies of size and scale. Some are vertically integrated and process ice cream, cheese and yogurt on their farms.”

Dairy-beef trend

Good said a lot of dairy farms, especially large dairies, are breeding the bottom half of their herd to beef bulls. He thinks the trend for dairy-beef crossbreds will continue to increase in coming years.

“We will see more dairy integrate into beef sectors,” he said.

Most of the dairy producers are retaining ownership and are raising the crossbreds to slaughter, Good noted.

“Dairy numbers have increased in the past 20 years, while beef numbers have declined,” he said. “Dairy numbers expanded this year and will continue to because they are more efficient than beef.”

He noted there are 2 million head of dairy-beef crossbred cattle in the U.S.

“That will likely increase to 3 million head next year,” he said. “More of the dairy industry is headed that way.”

Record exports

Good said beef exports will set a record for size this year and again in 2022. Imports are down, he noted, because Australia is rebuilding its beef herd after last year’s massive drought.

Good said exports for all meat are strong in 2021 and will continue to be strong in 2022.

“Meat exports are on fire,” he said. “A big part of the increase in beef, pork and broilers is increasing exports. Domestic demand has been strong, too, and that will continue.”

Fueling the increase in beef is higher domestic beef consumption. According to Good, beef consumption will rise 2.6% in 2021 and is projected to be up 2.5% in 2022, while pork consumption will be down 2% in 2021 and up 1% in 2022. Poultry consumption was flat in 2022, he said, and is projected to rise 1% in 2021.

Good said beef prices are the highest they have been since 2015.

“There was more demand than supply from 2008 to 2015,” he said. “From 2016 to 2022, there is [and will be] more supply than demand.”

But Good thinks that’s changing.

“Feeder-cattle prices are trading the highest they have been for the past three years because there is more opportunity for profit,” he said.

Dairy improvements

Good predicts the dairy industry will be healthier in the next two years than it has been for the past several years.

He said a dairy-beef crossbred calf is worth $100 more at birth than a dairy calf.

“We see a tremendous amount of growth there,” Good said. “Do we get back to 2014-15 levels? We’ll see. A lot more dollars are passing through farmers’ hands today.”

Good says he thinks China will soon become the No. 1 destination for U.S. beef.

“Right now, Japan is No. 1 and South Korea is No. 2, and China is No. 3, but long term, I think China will be our biggest customer,” he said. “Their middle class is expanding, and once they get a taste for our beef, they will want more.”

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