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Industry At A Glance: U.S. Cowherd Liquidation

Industry At A Glance: U.S. Cowherd Liquidation

USDA’s Jan. 1 cattle inventory report came in as expected:  2013’s beef cow starting number was pegged at 29.3 million cows. That level marks a selloff of six-million cows during the past 17 years – the equivalent of about 350,000 head/year. Perhaps more importantly, given the upward adjustment to last year’s inventory, 2012 now marks the largest year-over-year decline during that 17-year contraction period.

As discussed several weeks ago, the industry has done a tremendous job of compensating with better genetics, improved management and the introduction of various growth-enhancing technologies. The liquidation trend, though, is solidly entrenched and will extend further if drought conditions don’t improve.

january 1 beef cowherd numbers

There’s another aspect that’s also important here; that is, within the current cost/risk structure of operating a cow-calf operation, producers are seemingly responding more to cull cow prices vs. higher calf prices (as occurred during traditional 10-year cycles). If that’s the case, ongoing liquidation becomes self-perpetuating. That is, lower beef supply equals higher prices for cull cows, thereby providing incentive to load the trailer and sell the marginal cows.

Another Perspective: Why Are Beef Producers So Afraid To Cull Cows?

Clearly, there are a number of other factors driving this trend, but what really matters is the final outcome. Speaking of which, where do you see cow numbers headed in the next several years? How will the industry adjust around further decline? Tell us about your operational strategies in the face of these declining numbers. Leave your thoughts in the comments section below.

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