Pasture conditions over most of the United States are much improved over conditions at this time last year. In addition, corn prices are currently below $4 per bushel and expected to drop further Extreme drought conditions continue in parts of the Southwestern United States. The U.S. Drought Monitor from August 8, 2014 indicates relief for parts of the West, Southwest, and Plains; however, California and some areas of the Southwest are still impacted by significant areas of drought at the D4 or Exceptional Drought levels. Irrigation water is being sold at premium prices, and much irrigated acreage is being idled, cutting into California alfalfa hay, fruit, and vegetable production.
The NASS Cattle report indicated little or no increase in replacement heifer inventories for either beef or dairy herds over July 1, 2012 inventories, when the last July 1 estimates were released. This was not expected, and it indicates that any herd rebuilding is pushed into the future. At the same time, the proportion of heifers on feed is the lowest since July 2006, during the last upturn in total cow inventories.
For some context, the January 1, 2014 inventory of beef replacement heifers was up almost 4 percent over January 1, 2012 and was up almost 2 percent over January 1, 2013. However, all other heifer categories were lower over both 2012 and 2013 inventories. Dairy heifers showed the least percentage declines, but other heifer inventories were down by a whopping 7.5 percent over 2012 inventories and by 5 percent over 2013 inventories.