Counting Cows: Drought, Costs Will Drive Further Reductions

With spring upon us and drought persists, liquidation puts the industry on track to reduce the nation’s cowherd back near 2014 levels, which was the smallest beef cowherd since 1952.
With spring upon us and drought persists, liquidation puts the industry on track to reduce the nation’s cowherd back near 2014 levels, which was the smallest beef cowherd since 1952.
(Hall & Hall)

Drought has already baked in a significant impact for the cattle industry. While the calendar still says spring and rains that will produce adequate forage conditions for the 2022 grazing season might come, liquidation has already put the industry on track to reduce the nation’s cowherd back near 2014 levels, which was the smallest beef cowherd since 1952.

The USDA’s annual cattle inventory report found 30.13 million beef cows on Jan. 1, 2022, a decline of 2.3% from the previous year. Industry economists believe that inventory could contract another quarter or half a percent by Jan. 1, 2023.

This year’s cow inventory is just 1.04 million head more than the 2014 drought-induced low of 29.09 million. Economists see a combination of factors, including drought, that could continue to reduce the current cow inventory.

“The numbers don’t suggest that we could expand this year, or even if we would want to given the increased costs for cow-calf producers,” says Derrell Peel, Oklahoma State University economist.

Widespread Culling

The U.S. Drought Monitor in late March put more than 61% of the contiguous U.S. in some classification of drought, the largest portion of the country in a state of drought since September 2012. Comparing the drought monitor to a map of beef cow inventories, roughly 80% of the nation’s herd is in some category of distress.

That’s evident in cow slaughter the first 10 weeks of this year that averaged 75,000 head per week, an increase of more than 10,000 head per week over the same period last year.


The map  highlights 12 states in the center of the nation that account for 18.8 million beef cows, or 62.4% of the U.S. total. Among the 12, all but Iowa saw a reduction in beef cow inventory last year. As a whole,the U.S. beef cowherd declined by 719,000 head last year, and the dozen states highlighted here accounted for 92% of that decline(661,000 head net loss).

Even without the drought last year, Kansas State University economist Glynn Tonsor says beef producers would likely have reduced their herds some.

“I think we would have shrunk the herd a little even without the drought magnifier, simply because of the price signals ranchers were seeing,” Tonsor says.

The looming question going forward is if the beef cowherd will be reduced back to a level similar to 2014, which was 29.08 million head. The size of the herd then reduced available feeder cattle supplies and led to record prices for both feeder cattle and fed cattle.

“Over a six-year period from 2009 to 2014 we reduced the beef cowherd by about 3.5 million head, some of which was caused by drought and some of which was caused by economics,” Tonsor explains. “Is it possible we’ll take another million cows out of the inventory? Absolutely it’s possible, and I believe it’s at least a 50/50 chance that it will happen in the next two years. But it will be because of a combination of drought and increased costs that are not directly part of drought.”

Rising costs for fuel, grain and other inputs are expected to add $75 to the cost of producing a calf this year, according to USDA estimates. Other factors might also play a role in declining cow numbers, as shown by the 4.7% decline in Missouri.

“Missouri declined 94,000 beef cows, and we didn’t have the drought conditions experienced by other states,” says Scott Brown, University of Missouri economist. “That’s the third-largest decline in inventory of all the states. I can only explain that large of a decline with the assumption that soybeans are too attractive.”

Brown believes rising values for soybeans encouraged producers to convert pastures to row crops in some parts of the state, and a similar scenario could play out again this year.

“Grain prices are higher and cow costs are higher, too. So the incentive is there for Missouri producers to make that swap again,” Brown says. “And once you plow that pasture it doesn’t go back to pasture very often.”

Impact on Prices

If drought produces a silver lining, it’s the inevitable higher cattle prices from herd reductions.

“Significant drought this year will have more noticeable impacts on cow markets, will change the timing of feeder cattle and ultimately feedlot production, and will have more implications for the industry in subsequent years,” Peel says. “There is potential for the drought to push cattle inventories significantly lower than planned and set up a market reaction similar to 2014/15 in the next couple of years.”

The effect of smaller feeder cattle inventories is already pushing prices higher and could provide some needed financial relief this fall.

“Ranchers who have calves hitting the ground this spring will sell them this fall in the realm of $2,” Tonsor predicts. “That’s my current best guess. If we pull another million cows out of the herd, and if demand holds, I think we have the possibility of $2.50 per cwt calves in two years.”

Should liquidation take the cow herd back to 2014 inventory levels, the scenario won’t be a mirror image of 2014. That’s because the industry has changed in some important ways.

“We are more productive than we were in 2014,” Brown explains. “Slaughter won’t go back to 2014 levels, which was about 115,000 head per day. I project that daily slaughter average will be closer to 125,000 head per day in 2024, which is about 10,000 head per day less than what we saw in 2021.”

The growing use of beef-on-dairy will also affect the feeder cattle supply to some degree over the next few years and could minimize the impact of the smaller beef cow inventory.


Latest News

Is Grass-Fed Beef Healthier or Better for the Environment?

Oklahoma State University meat scientist Gretchen Mafi has studied the scientific differences between beef that comes from animals finished on a grain diet versus those animals finished on grass.

How To Give a Calf Electrolytes, The Dehydration Lifeline

Electrolytes can serve as a needed boost for a scouring calf. Here's a look at what’s in electrolyte products, how much electrolytes should be given and a few ways and tips on how to give electrolytes to a calf.

Colostrum Management A Cornerstone For Dairy Calf Health

Dairies have made great strides in managing colostrum, but about 14% of calves fail to get passive transfer of antibodies. There is still opportunity to improve upon this, encourages Sandra Godden, DVM.

Be Prepared, Wheat Pasture Bloat on the Rise

As growing conditions improve on wheat pastures that have been grazed short all winter long, the threat of bloat rises. Here's how to combat the onset of bloat in grazing calves.

Cows Will Tell You What is Wrong with a Facility Design

As we transition the cows into a new facility, take time to watch the cows' usage of the facility. Cow behavior in the facility will indicate what may need to be adjusted.

What Does the Drought of 2022 Mean for Lactating Pairs in the Spring of 2023?

While some parts of the U.S. remain in drought conditions and the soil moisture profile is in a deficit due to months of below normal precipitation, grass growth will likely be impacted this spring.