RANCHING Business
Herd Expansion Means Tighter Supply First By Lyndee Stabel
I
N A ROOMFUL OF CATTLE FEEDERS, AN OKLAHOMA STATE University (OSU) livestock marketing specialist had everyone’s full attention as he said there is no way
around it: In the next 2 to 3 years, the already short supply of feeder cattle will only get tighter. OSU Breedlove Professor Derrell Peel described the
feeder cattle situation and the circumstances leading up to it at the eighth annual Feeding Quality Forum in Omaha, Neb., and Garden City, Kan., in August. With a U.S. cattle inventory at
levels not seen since 1952, “We’re much smaller than we ever intended to be,” Peel said. Drought and other circumstances have led producers to liquidate their cow herds 15 out of the last 17 years, despite recent market signals to expand. Peel expects that to change. Throughout much of the U.S.,
drought conditions have improved, opening the door to herd rebuilding. Instead of looking for the likeliest animals to cull, many producers will begin looking for the best heifers to keep. “For the next several years I would expect the [heifer
Dr. Derrell Peel
replacement] percentage to be above average,” Peel said. “And that has implications as to what happens to feeder supplies in the short run.” Growing the cattle population is the ultimate solu-
tion to the limited feeder supply, but it is not an instant fi x. Until a heifer starts calving, each replacement kept is one less animal available for feeding. Cattle feed- ers already competing for a piece of that small supply know but don’t relish the fact, but “it will get worse before it gets better.”
Youthful optimism Even so, Peel is optimistic about the growth rate of
the national herd. Many producers were forced to cull heavily during the drought, but they did not do it at the expense of their herds’ quality. Many heifers were kept and older cows were sold. “We’ve probably got this herd as young and produc-
58 The Cattleman November 2013
tive as maybe it has ever been,” Peel said. “When we do start to expand, we have the capability for a year or 2 to expand faster than what we could have probably seen otherwise.” Growth will still take time. Peel expects it to be
2017 before herd numbers can even recover to 2011 pre-drought levels. Strong markets for feeders will continue to pull in a share of animals and moderate herd growth.
Cattle imported from Canada and
Mexico make up only a small portion of the feeder cattle market, but Peel said the industry cannot expect extra animals from these sources to help supplement its own limited supply. Mexico contended with its own
extreme drought and liquidated much of its herd, many of those animals entering the U.S. “Last year we got just short of 1.5
million head of cattle from Mexico,” Peel said. “That is not a sustainable number. Those exports were at the expense of their ability to produce in the future.”
Already the results are evident, with 450,000 fewer
head imported from Mexico year-to-date compared to last year. And with Canada rebuilding its own national herd,
those imports will remain relatively low. All these factors lead Peel to believe the coming
years will see the number of feeder cattle fall even further than the 3.5 percent decline projected by the end of this year. Even though overall herd numbers have been declin-
ing since the 1970s, the number of cattle on feed has not followed the same pattern. The industry has been able to keep those numbers up by feeding cattle more intensively and at a younger age so cattle move more slowly through the feeding process. For every calf on feed during the early ’70s and ’80s, there were 3 more available to replace it. By last year, fewer than 2 calves were available for every 1 calf on feed. Years of cheap corn prices made it profi table to buy
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