Dec. 5, 2016
Cattle markets wrap up 2016
by Derrell S. Peel, Oklahoma State University Extension livestock marketing specialist
The transition to bigger beef supplies (and psychologically to the idea of bigger supplies) that began impacting cattle markets in 2015 continued in 2016. Markets adjusted down, including a brutal, fear-driven crash in markets in the third quarter, followed by a significant rally in the fourth quarter. Fed cattle prices have recovered 12 to 15 percent since mid-October while feeder cattle are up 10 to 12 percent. Calf prices have increased about 25 percent since the October lows.
Feedlots have marketed cattle very aggressively since February resulting in higher than expected slaughter rates. Steer slaughter has not pulled back so far in the fourth quarter, as expected, and is up 7.2 percent for the year to date compared to last year. Steers on feed in feedlots as of Oct. 1 was down 1.4 percent from one year ago, indicating that feedlots have pulled cattle, especially steers, ahead; thereby tightening future supplies.
As expected, heifer slaughter is up 3.5 percent year over year so far this year with sharply higher heifer slaughter rates in the second half of the year more than offsetting decreased year over year heifer slaughter early in 2016. Beef cow slaughter is also up as expected this year, with the year to date total up 13.4 percent. Despite this sharp increase in year over year beef cow slaughter, the 2016 net herd culling rate is projected at less than 8.5 percent, less than average and consistent with modest herd growth for the year.
Beef production increased more than expected in 2016. Higher than expected cattle slaughter in 2016 has resulted in projections of annual beef production revised upwards several times during the year to the current estimate of 5.8 percent more beef than 2015. Average cattle carcass weights have been down year over year since May. Steer and heifer carcass weights, though down from last year’s record levels, have remained higher than expected this fall due to excellent feeding weather into mid-November. Carcass weights should fall seasonally in the remaining weeks of the year, particularly as some colder weather impacts are reflected in the data.
Beef imports are down in 2016 while beef exports are up. This helps moderate the large increase in beef production this year reducing the supply pressure on the domestic market. Nevertheless, per capita U.S. beef consumption is increasing in 2016, the first sizeable year over year increase in more than a decade. Per capita beef consumption is projected at 55.5 pounds in 2016, up 2.6 percent from one year ago. Pork and poultry production and consumption are up as well in 2016, adding to the total meat supply pressure in beef markets.
Retail beef prices in October were 7.5-8 percent below year earlier levels while retail pork prices were down nearly 6 percent and broiler prices were down nearly 4 percent year over year. Record cold storage inventories in October are indicative of the supply challenges for beef markets but, in general, it appears that the unexpectedly large beef supplies in 2016 have moved through retail grocery, HRI (hotel, restaurant and institution), and export market channels fairly smoothly this year. Additional beef production is expected in 2017 but with a smaller increase than in 2016. Growing cattle inventories and beef supplies resulted in more cattle and beef market transition and a fair amount of heartburn along the way but most of the transition appears to be complete as 2016 wraps up.
How many heifers to keep?
by Glenn Selk, Oklahoma State University Emeritus Extension animal scientist
Each year commercial cow-calf operations must decide how many replacement heifers are grown out to be put in the breeding pasture. Individual ranches must make the decisions about heifer retention based upon factors that directly affect their bottom-line. Stocking rates may have changed over time due to increases in cow size. Droughts have reduced pasture condition in many areas of the Southwest.
Matching the number of cattle to the grass and feed resources on the ranch is a constant challenge for any cow-calf producer. Also producers strive to maintain cow numbers to match their marketing plans for the long term changes in the cattle cycle. Therefore, it is a constant struggle to evaluate the number of replacement heifers that must be developed or purchased to bring into the herd each year.
As a starting place in the effort to answer this question, it is important to look at the “average” cow herd to understand how many cows are in each age category. Dr. Kris Ringwall, director of the Dickinson, North Dakota Research and Extension Center, reported on the average number of cows in their research herd by age group for a period of more than 20 years. The following graph depicts the average percent of cows in this herd by age group:
The above graph indicates that the typical herd will, “on the average,” introduce 17 percent new first-calf heifers each year. Stated another way, if 100 cows are expected to produce a calf each year, 17 of them will be having their first baby. Therefore, this gives us a starting point in choosing how many heifers we need to save each year.
Next, we must predict the percentage of heifers that enter a breeding season that will become pregnant. The prediction is made primarily upon the nutritional growing program that the heifers receive between weaning and breeding. Researchers many years ago, found that only half of heifers that reached 55 percent of their eventual mature weight were cycling by the time they entered their first breeding season. This data was reinforced with data from Oklahoma State University. If these heifers were exposed to a bull for a limited number of days (45-70), not all would have a chance to become pregnant during that breeding season. Therefore, it would be necessary to keep an additional 50 percent more heifers just to make certain that enough bred heifers were available to go into the herd. As soon as possible the heifers should be pregnancy checked and the open heifers marketed as stocker heifers.
However if the heifers were grown at a more rapid rate and weighed 65 percent of their eventual mature weight, then 90 percent of them would be cycling at the start of the breeding season and a much higher pregnancy rate would be the result. Even in the very best scenarios, some heifers will be difficult or impossible to breed. Most experienced cow herd managers will always expose at least 10 percent more heifers than they need even when all heifers are grown properly and weigh at least 65 percent of the expected mature weight.
The need to properly estimate the expected mature weight is important in understanding heifer growing programs. Cattle type and mature size has increased over the last half century. Rules of thumb that apply to 1000 pound mature cows very likely do not apply to your herd. Watch sale weights of culled mature cows from your herd to better estimate the needed size and weights for heifers in your program. Most commercial herds have cows that average about 1200 pounds or more. This requires that the heifers from these cows must weigh at least 780 pounds at the start of their first breeding season to expect a high percentage to be cycling when you turn in the bulls.
This discussion is meant to be a STARTING PLACE in the decision to determine the number of heifers needed for replacements. Ranchers must keep in mind the over-riding need to understand what forage base resources that they have available to them.
Cow-Calf Corner is a weekly newsletter from the Oklahoma Cooperative Extension Agency.