Share |

Plush pastures, falling feed prices lead to some heifer retention

Recovering pastures and reduced feed prices are likely to spark a slow trend of heifer retention for U.S. beef producers, Purdue Extension Agricultural Economist Chris Hurt says.

Beef cattle numbers nationwide have been falling since 2007 because of drought that ransacked pastures and drove feed crop prices sky-high. More favorable weather bringing more normal forage and grain production should result in more producers keeping replacement heifers.

“Beef cow operations in some parts of the country where pastures have been restored are probably getting ready to retain heifers,” Hurt stated. “Beef cow numbers have declined in the Southeast by about 700,000 head, or 12 percent, since 2007. Midwest numbers have dropped by 680,000 head, or 14 percent, since 2007. Both of these areas should have the pasture and the feed to begin heifer retention. The northern plains is another area that is ripe for herd expansion.”

Currently, the U.S. Department of Agriculture has rated 72 percent of the nation's pastures as fair, good or excellent, compared with just 46 percent in 2012.

Prices for feedstuffs such as corn and soybean meal are expected to fall when new-crop harvest begins in the fall. Corn prices could fall by $1.50 per bushel, and fall soybean meal prices could be as low as $150 per ton lower than current old-crop prices, according to Hurt.

But parts of the country haven't yet had enough pasture recovery for producers to consider growing their herds. Such areas include the central and southern plains and the western U.S., which have about 43 percent of the nation's beef cows.

“Initial retention of heifers likely will occur this fall in areas primarily east of the Mississippi River, plus the Delta, the western Corn Belt and the northern Great Plains,” Hurt said. “This is a large area that currently has 57 percent of the nation's beef cows.”

Lower feed prices on their own might not be enough to encourage major herd expansion, though. According to Hurt, it will take higher calf prices as well.

Current calf prices are up slightly since June, but likely not enough to stimulate major expansion. So while heifer retention and expansion plans will begin this year, national beef production will drop by about 4 percent in the last half of 2013 and 5 percent in the first half of 2014, according to USDA.

The drop should lead to higher finished cattle prices, which would lead to higher calf prices.

“The industry might see the start of heifer retention this fall, but the magnitude of expansion is expected to be low and slow to get underway,” Hurt said. “Beef cow producers know that herd expansion is a long-term investment, and they generally want a more extended period of favorable returns before making major financial commitments.”