Cattle Herd Contraction Continues

University of Missouri livestock economist Scott Brown says the latest livestock slaughter report from the USDA indicates producers are liquidating cows and they aren’t holding back replacement heifers.  Cows and replacement heifers are female breeding stock that would be used to produce more beef and meat for the consumer market.  “Year-to-date beef cow slaughter is 13.1% above year-ago levels,” Brown says. “That just tells us that both drought and lack of profitability have been important. It’s not just beef cow slaughter. If you look at heifer slaughter for September, it was 8.1% above year-ago levels.”  All this means is that overall U.S. herd population will continue to decline, and meat supplies will become more scarce going forward. 

Brown indicates that demand has been strong for beef, but with even tighter supplies coming, there is still a lot of uncertainty in 2023 and beyond.  “We can take a little bit of the shine off these prices if demand were to weaken,” he says. “I’m beginning to see more forecast for Real GDP with the minus sign in front of it for 2023.”

Brown says the two things that matter most to producers right now in terms of keeping or culling their herds are drought and the cost of production.

Editor’s Take:

The severe drought, particularly in cattle production areas of the Southwest, is definitely a contributing factor behind the herd reductions now taking place. Cattle producers, in many instances, are left with little choice due to lack of pasture and very limited hay supplies. However, should demand remain strong, cattle producers could improve profitability in 2023. The one big question impacting consumer consumption demands of beef will be whether we have persistent inflation. However, cattle producers will still need new or used trucks in the months ahead. Make sure to put your increasing inventory on AgTruckTrader.com so they can quickly determine where to purchase their next truck.