Beef cow slaughter continues at liquidation pace

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With only a few weeks of data to finish the year, beef cow slaughter, though significantly smaller than last year, is on pace to ensure additional herd liquidation for the 2012 year.  For the year to date, beef cow slaughter is down 12.6 percent from last year.  Smaller year over year reductions in recent weeks have reduced the magnitude of the decrease from last year.  In fact, one interpretation of smaller year over year decreases the last few weeks could be seen as an indication that liquidation is increasing with growing slaughter rates relative to a year ago.  However, by this time last year most of the drought forced liquidation was past and beef cow slaughter had dropped back to more seasonally typical levels.  In other words, weekly beef cow slaughter has dropped back to single digit decreases from last year after spending much of the year with double digit decreases but it really says more about what was happening last year than this year.

However, at the current pace, 2012 beef cow slaughter will be over 11 percent of the January 1 cow herd inventory.  This will make the fifth consecutive year of double digit beef culling rates.  The average annual beef cow culling rate is 9.6 percent.  In previous liquidation phases, beef cow culling has increased over 10 percent per year for only one or two years.  Five years in a row of double digit beef culling has never happened since beef cow slaughter data became available in 1986. The liquidation in 2012 is less than 2011 and the beef herd is expected to be down roughly 1.6 percent on January 1, 2013.  In order to halt the persistent beef cow liquidation, beef cow slaughter will need to drop by 13 percent or more, year over year, for each of the next two years.  Beef cow culling rates usually drop to under 9 percent for two to four years during herd expansions.  The drought will determine whether that process can begin in 2013.

Persistent extreme drought conditions are setting up another round of significant herd liquidation if conditions do not improve.  In Oklahoma and similar regions that rely on stock ponds for livestock water, the lack of water is the most critical factor in the next 2-3 months.  We have already seen many calves marketed this fall with dried mud to the knees on the front legs, indicating that they have been utilizing the last available water and before being forced to market. Some cows will be liquidated through the winter for lack of water and many more will move promptly next spring if the current dry conditions persist.  In the Southern Plains, if the current dry winter is followed by a dry spring, 2013 will be a repeat of the massive liquidations of 2011 except that it will happen earlier with more sales before July 4 compared to after, like 2011.

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neb.  |  December, 17, 2012 at 12:20 PM

Cow kill numbers are going to drop WE HAVE FEWWER COWS TO KILL!!!!!!!!!!!!!!!!!!!!!!!!From 2000-2012 42% of cattle on feed are heifers . Large numbers of acers of grass are being plowed OUT !!!!!!!!!! of grass to plant CORN.Just what the hell is all this corn for OH! sweatner for POP

Coleman, Texas  |  December, 18, 2012 at 03:03 PM

ethanlo. Government idiot types believe Ethanol is the answer to energy independence. At least enough to prop up ethanol production through subsidies. I've heard that if the ethanol subsidies stop, roughly 3000 over leveraged ag banks in the mid west will fail in 2013. going to be ugly.

December, 18, 2012 at 05:21 PM

First, do cows eat corn? No, cows eat grass and until cow numbers comes into balance to the supply of grass liquidation will continue. Second, is there any evidence that the future value of the calves produced from a cow is at least equal to the present value of that cow as beef plus the risk? Again no, otherwise liquidation would stop. Third, have the feedlot operators and by extension the packers done anything to signal that the future value of calves is worth the risk to raise, keep a cow and produce a calf? Again no! The operators and packers have always pushed all the production risk and price risk on the producers, especially the smaller producers. Evidence the dramatic drop in smaller producers (20-50 cows). Ten years ago these producers produced 11% of the calves, today almost none. That 11% would go a long ways to supply the deficit. Grain producers, even the smallest ones can easily sell any amount of their crop¸ long before it’s planted, as it grows and even after it is in the bin. I know because I do it a 1000 bu. at a time directly with the ethanol plant. There is no comparable system for smaller cattle producers. When the day comes that packers bid for calves not yet born directly from the producers, herd expansion can begin.

Mark Sanders    
Knox,TN  |  December, 18, 2012 at 06:48 PM

When all the statistics point to the fact that ethanol is a losing proposition and the government keeps shoring the industry up with subsidies and causing pasture to be tilled for corn, is it a stretch to think it is a master plan to get rid of cattle.

Iowa  |  December, 18, 2012 at 07:33 PM

news for Mark Sanders: there is no ethanol subsidy. The tax credit that once existed was given to the oil companies for blending ethanol with gasoline. ethanol producers never received a subsidy of any kind.

SD  |  December, 18, 2012 at 10:20 PM

So a government mandate that we consume an ever increasing amount of ethanol is not a subsidy???????????????????

Oklahoma  |  December, 19, 2012 at 08:21 PM

Tastes bad too.

Oklahoma  |  December, 19, 2012 at 08:21 PM

Tastes bad too.

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