Will the feeder cattle supply trend reverse?

Jul 31, 2015

Last week’s Industry At A Glance focused on the implications of declining beef cow culling rates through the first half of 2015. Reduced culling rate serves through June serves as important confirmation of producer intention to rebuild the U.S. cowherd. Simultaneously, the other side of growing the cowherd revolves around retaining more replacement heifers. That effort is also underway as beef producers held an inventory of nearly 5.8 million heifers intended as replacements on January 1, versus the 5-year average of approximately 5.4 million head. And USDA’s July cattle inventory report will provide further detail as to the magnitude of the rebuilding effort. 

Rebuilding will provide a welcome reprieve for those entities forced to chase supply – such as feedyards. The snapshot below details feeder cattle supply outside feedlots on January 1. The number is a function of inventory of steers, “other” heifers (those not intended to be replacements) and calves weighing less than 500 lb. The graph clearly depicts the ongoing story of declining availability of feeder cattle going into each new year.

As noted last week, “With this trend in mind, 2015 is on track to establish a larger cow inventory for 2016.” And that will ultimately mean larger supply of feeder cattle in the years to come. However, the primary questions that linger now revolve around the extent to which beef producers rebuild the herd – and duration of rebuilding effort. The answer to those questions directly impact how the feeder cattle supply reverses trend in the years to come.  

How do you foresee the rebuilding effort occurring? Will it be a short-duration phenomenon, or more of an extended process? What’s your perception of how beef producers view the future and their desire to run more cows? Leave your thoughts in the comments section below.  

Source: BeefMagazine.com