Source: Glynn T. Tonsor, Associate Professor, Department of Agricultural Economics, Kansas State University
Last Friday USDA released the much anticipated January Cattle Inventory Report. Given the host of issues facing the cattle industry this report will be dissected and debated for weeks if not years to come. Overall the take-home contribution of this report is additional confirmation of shrinking national cattle supplies. Most final estimates were within the range of pre-report expectations with the few exceptions (namely the annual calf crop being down nearly 3% and 3-state small grain pasture grazing supplies being down almost 16%) generally suggesting upcoming feeder cattle supplies may be even tighter than previously believed.
A deeper assessment of multi-year adjustments can shed additional light on transitions underway in the industry. Tables 1 and 2 were derived to present estimates of closely watched herd size statistics individually for the 10 states currently with the largest beef cow herds as well as regionally and nationally. Values are presented to enable easy comparison not to last year (which is provided in Friday’s report) but rather to the pre-drought period , 10 years ago, and 20 years ago. This reveals some important broader trends that can easily be missed by looking solely at year-over-year adjustments. While the ongoing drought certainly has important implications, comparing the current situation to that of 10 and 20 years ago reveals additional industry adjustments underway.
A review of table 1 reveals how remarkably stable the geographic dispersion of the beef cow herd was over the 1994-2010 period. Adding the ongoing drought and heifer retention patterns (table 2) enriches current understanding. While in total head the Great Plains followed the national trend of downsizing over the 1994-2010 period, its relative role as home to beef cows and heifers being retained was growing prior to the ongoing drought and has since accelerated. This suggests the Great Plains may be a “growth area” in terms of its role in the national industry. Of course, the current ongoing weather concerns facing this region may well alter this trajectory. Conversely while the share of the country’s beef cows has been stable in the Southeast, this region has a longer history of a decreasing role in retaining heifers. This suggests the Southeast may slowly be decreasing its overall relative industry role. While this region is the only broad area with “better pasture conditions than normal” which otherwise could indicate an expansion opportunity, the past pattern of reduced comparative heifer retention casts doubt on the likelihood of region-level expansion. Between the patterns of these two regions is the Southern Plains. Prior to the current drought, the herd in Texas was contracting while the herd in Oklahoma was expanding leading to limited net change in the region’s collective role in the industry. However, since 2010 the portion of both beef cows and retained heifers residing in the Southern Plains has fallen notably.