There has been little incentive for ranchers to expand their herds the past few years, and that trend was further substantiated in last month’s USDA mid-year Cattle Inventory report. For the third year in a row, the July in-ventory declined, and it’s also the smallest July inventory number in 37 years.
The total cattle inventory declined 1.5 million head compared to last July, totaling 101.8 million head. The beef cow herd continues to shrink, declining 450,000 head to 32.2 million. Interestingly, beef cow slaughter has slowed, but it remains large enough to more than offset the number of replacement females being added to the herd. Compared to a decade ago, the beef cow herd is down more than 2 million head.
Weather and markets are typically the two factors that drive expansion or liquidation of the cow herd, and the recent trend is no exception. Weather extremes — a cold calving season in the northern Plains, coupled with extreme drought in Texas and the southern Plains — have driven a lot of cows to market the past two years. And the calves from those cows are valued at significantly less than just two years ago, further encouraging ranchers to cull their herds hard.
Higher feed costs, higher fuel bills and lower prices have driven a lot of cows to town. But production costs and Mother Nature are not the only factors influencing cattle owners. In fact, maybe the most important fac-tor — demand — is what is really hurting the cattle markets.
The ingredients for a rally in both the fed and feeder markets would appear to be in place — except for de-mand. Our industry is feeding fewer cattle, slaughtering fewer cattle and selling less beef at lower prices. Cattle feeders have lost money for months, and packer margins have been just as ugly lately.
Poor demand, of course, can be linked directly to our nation’s recession and the reduced spending power of consumers. But we must also consider the effects of our industry’s critics who call us “factory farmers” and who misrepresent ranchers as uncaring and oblivious to the welfare of our animals.
The Drovers’ auction market survey reports that bred-female prices declined during July. Young-and-middle aged, bred females declined nearly $80 per head, ending July at $745. Aged, bred cows dropped about $8 to $578.50, while bred-heifer prices actually increased $26 per head during July to $845 on light offerings.
Young and middle-aged, open females remained relatively steady, ending July at $59.13 per hundredweight, down just 75 cents per hundredweight from June. Marketings were relatively light for aged, open cows, and prices were down modestly at $45.75 per hundredweight. Heiferettes were down $2.50 at $59.55 per hundred-weight.
Prices for large pairs declined $76 per pair, ending July at $941.50. Small or aged cows with calves averaged $653 per pair, a decline of $29. Cows with small calves averaged $825.84 per pair, a decline of $107.
Prices for canner and cutter cows rose slightly during July, ending at $40.50 per hundredweight. Utility and commercial cows also increased $1.23 per hundredweight, averaging $48.69.