The feedlot inventory as a percentage of the total inventory has increased over time, and the declining number of feeder cattle means there are not sufficient feeder cattle to maintain feedlot inventories this year.
Statistically, impulse heifer breeding is about 80 percent more variable than planned heifer breeding. Therefore, impulse heifer breeding plays an important role in the dynamics of cattle cycles.
The January 1, 2024, beef cow herd inventory was 28.22 million head, down 2.5 percent year over year and a decrease of 3.47 million head or 10.9 percent lower, from the cyclical peak in 2019.
U.S. hay production in 2023 was 6.3% higher than the drought year of 2022, but remains 7.8% lower than the 10-year average. Hay stocks were higher in eight of the ten states, with decreases only in Kansas and Kentucky.
Despite ever smaller feeder cattle supplies, feedlot inventories have temporarily halted the slow decline of the last year with the September surge in placements.
There can be little doubt that the biggest issue in the cattle industry right now is the question of when herd rebuilding will begin. The challenge of herd rebuilding can be summed up with three questions.
Although drought persists north and south of Oklahoma, forage conditions have improved greatly in the state this summer. July was the seventh wettest July on record in Oklahoma.
Despite sharply higher cattle prices, there is no data to suggest heifer retention or enough decrease in beef cow slaughter to initiate herd expansion, although the most recent weekly slaughter data are encouraging.
The sharp increase in feeder cattle prices this year represents a growing market incentive for the beef cattle industry to transition from liquidation to expansion, but it does not appear the industry is responding yet.
Persistent drought in major beef cattle production regions continues to have a significant impact on the cattle industry despite improvements in drought conditions in other parts of the country.
Uncertain when, but there will be strong interest in rebuilding the herd when conditions permit. Leaving aside the question of more drought, what's possible in 2023 given current availability of replacement heifers?
Given the limited hay supply, proportionally more wheat pasture is likely to be used for cow herds than for stockers. Even if there is wheat pasture, stocker demand may be somewhat lighter than usual this year.
Drought impacts have accelerated sharply in the southern plains in July, with the volume of feeder cattle in Oklahoma auctions up 24% the last two weeks and the volume of cows and bulls up nearly 124%.
Drought is expanding in the country. There is plenty of time to avoid widespread drought impacts but without significant moisture in the next 2-3 months, the cattle industry could see major impacts.
Most components of fall and winter stocker budgets are uncertain at this point but it’s not too early to begin to pencil out possibilities, evaluating risk and perhaps taking actions to lock in some budget components.
Wheat pasture development and growth is likely to slow or even reverse if forecast weather conditions are realized. This, in turn, may reduce stocker cattle demand in the coming weeks.
The U.S. meat industry faces unprecedented threats as COVID-19 sweeps through labor forces nationwide. Production of beef, pork and poultry are simultaneously threatened by labor availability and processing capacity.