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Herd expansion update: Is 2015 beef cow liquidation up or down?

Herd expansion update: Is 2015 beef cow liquidation up or down?
Are cattle producers still in an expansion mindset?

Beef cow slaughter rate, measured as a percentage of the beginning inventory, plays a huge role in determining the size of the following year’s beginning inventory of breeding cows. Accordingly, liquidation trends are important indicators of the direction of cow inventory. 

We began 2015 with approximately 29.7 million cows. Beef cow slaughter will be record low in 2015 and officially end up somewhere around 2.22 million cows, depending on final numbers recorded through December. As such, the slaughter rate for 2015 will be approximately 7.5% of beginning inventory. 

Beef cow slaughter through November was lower every single month in 2015 versus 2014 – and it appears December will continue that year-over-year trend. From an annual perspective, 2015’s beef cow liquidation will be down nearly 340,000 cows compared with last year.

beef cow slaughter 2015The most comparable year to 2015 occurred in 2005, the last time beef producers tried to expand cattle numbers. Beef cow inventory was marked at 32.7 million cows while beef cow slaughter ended at 2.52 million cows, or 7.7% of the beginning inventory. For comparison, the average slaughter rate averaged just slightly over 10% during the past 10 years.

Reduced liquidation has largely been driven by the favorable market in 2014. Cow-calf producers entered the spring and summer of 2015 with optimism about the market in the years to come. However, the recent market reversal may have some producers rethinking their cow culling strategies going into next spring. 

How do you see market signals in the second half of 2015 influencing the cow-calf sector going into 2016? What will the beef cow liquidation rate look like next year? Does herd expansion halt because of renewed market concerns? As such, will the industry witness a flux of older cows coming to market next fall – or perhaps even earlier? Or do you perceive producers staying the course?  

Leave your thoughts below.

Nevil Speer is based in Bowling Green, Ky., and serves as vice president of U.S. operations for AgriClear, Inc. – a wholly-owned subsidiary of TMX Group Limited.  The views and opinions of the author expressed herein do not necessarily state or reflect those of the TMX Group Limited and Natural Gas Exchange Inc.

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