Cattle Cycle Scenario 2: Drought Abates

Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

 

A previous article considered what continued drought might force the industry to do in terms of additional herd liquidation.  Another scenario is that drought across the country subsides and is not a significant factor in 2022.  The question then becomes what will the industry try to do and to what extent will it be able to do that? The cyclical peak in the beef cow herd inventory was in 2019 and the industry has been in liquidation for three years, significantly enhanced by drought in 2021 and to a minor extent in 2020.  If drought is not a limitation in 2022, will cattle producers continue herd liquidation? The answer will be determined by what cattle producers want to do and can do relative to cow culling and heifer retention.  Higher cattle prices and expectations of continued higher prices may have producers interested in slowing liquidation, holding cattle numbers steady or even expanding.  However, the extent to which higher prices leads to expectations of higher profitability (and a desire to expand the herd) will be tempered by higher feed and other input costs.   

 

For producers affected by drought in 2021, the first step will be herd rebuilding.  The overall beef cow culling rate in 2021 was 11.55 percent, the highest since 2011.  In drought areas, producers who culled heavily last year may be able to sharply reduce culling this year if forage conditions improve.  In other areas producers may hold cow culling to a minimum.  After increasing sharply in 2021, beef cow slaughter could drop by as much as 10-15 percent year over year in 2022.  This would result in a beef cow culling rate between 10 and 10.5 percent.  An even lower culling rate might be possible…the average culling rate in the last herd expansion from 2014-2018 was 8.7 percent…but it doesn’t seem likely that expansion signals are that strong yet.

 

The other component of herd expansion is heifer retention.  The drought impacts from 2021 determine what is possible in 2022.  The number of beef replacement heifers on January 1 was down 3.3 percent year over year with the subset of those that are expected to calve this year down 2.8 percent from last year.  The reduced inventory of replacement heifers significantly limits possible herd changes in 2022.  It appears to me that the most aggressive 2022 scenario is for the industry to hold the beef cow herd to a low level of liquidation…perhaps a 0.5 percent or less reduction in beef cows.  Achieving herd expansion is likely not feasible and even holding the herd to zero change stretches the numbers to unlikely levels.  If the industry does try to minimize herd liquidation in 2022 and prepare for later herd expansion, the reduction in cow and heifer slaughter could result in a larger decrease in beef production this year than is currently forecast.   

The most likely scenario is probably somewhere in-between the severe drought and no drought scenarios, with some drought continuing in some regions. The result could be modest levels of additional beef cow herd liquidation in 2022, perhaps less severe that 2021 but still significant continued reduction in the beef cow inventory. It is likely that cattle numbers will continue to tighten in 2022.

 

What’s a Good Bull Worth?

Mark Z. Johnson, Oklahoma State University Extension Beef Cattle Breeding Specialist

 

The question that has been asked forever, or at least as long as we have been breeding cattle with a notion of trying to make the next generation better.  It is a classic and timeless question.  It is an important question.  At this time of year, when many bulls are being marketed and we are planning ahead for spring breeding season, it is the question that is asked a lot!  Perhaps it is all the above because it is so challenging to answer.

 

The Answer

I remember first hearing the answer nearly 40 years ago as a student at OSU.  “A good bull is worth the value of five calves he sires”.  I’ve heard that answer again many times over the years.  I believe it is a good answer and a good rule of thumb to follow, the problem is it doesn’t exactly narrow down the range.  If we do a little math, this answer may in fact lead to more questions.  Such as ………

 

When are we marketing our Calves?  What is their Value?

According to the most recent USDA Cattle Market Report:

 

500 lb. weaned steer calves (Large, 1) are worth about $2.00/lb. for a value of $1,000 per head.  Therefore, if my future marketing plan is to sell weaned steers, $1,000 x 5 = $5,000 is the answer.

 

875 lb. yearling steers (Large, 1) are worth about $1.57/lb. for a value of $1,374 per head.  Therefore, if my future marketing plan is to sell yearling steers, $1,374 x 5 = $6,869 is the answer.

 

920 lb. beef carcasses are worth $2.26/lb. for a value of $2,079 each. Therefore, if my future marketing plan is to retain ownership through finishing and sell fed cattle on a carcass value basis, $2,079 x 5 = $10,395 is the answer.

 

So, in the current market, a good bull is worth somewhere between $5,000 - $10,395 to a commercial cattle operation.  Where exactly in that range depends on your marketing plan and the market conditions at that time.  Not an exact number because there are “many layers to this onion”.  One important point illustrated here is that the longer you will own the offspring before marketing, the greater the amount you can afford to pay.  Retained ownership gives you more time and opportunity to capture the value of your investment in genetics.  And we haven’t even considered the value added to replacement females if we select daughters as our next generation of cows.  More on that next week when we discuss looking at your unique operation to shed more light on this question and determine where to apply selection pressure.  Until then, keep the following chart in mind as another way to evaluate ownership cost of bulls on a per cow or annual basis.

 

*assuming 157 cows bred between ages 1 to 6 (over 6 breeding seasons)

 

 

*assuming 6 years of service

 

Beef Quality Assurance: Cattle Handling Principles

Bob LeValley, Oklahoma Beef Quality Assurance Coordinator

 

Cattle producers have long recognized and fulfilled the need to properly care for livestock.  Sound care and handling practices, based on years of experience and research are known to impact the well-being of cattle, individual animal health and herd productivity.  Cattle are raised in very diverse environments and geographic locations.  One specific set of production practices will not work for all cattle producers, but, personal experience, Beef Quality Assurance program principles, and professional judgement serve as valuable resources for proper animal handling and care.  Animal behavior knowledge will facilitate proper animal handling to the benefit of both the handler and the livestock.

 

Knowledge of vision characteristics of cattle will help direct movement.  Due to the location of their eyes, cattle have a wide-angle field of vision in excess of 300 degrees.  This means they have a narrow blind spot which is directly behind them.  They can see some colors and can distinguish between individuals/objects based on shape.  Cattle have a tendency to move from dark areas to lighter areas, provided the light is not glaring.  Shadows can often appear extreme to cattle. 

 

Handling issues related to vision-related behaviors include:

• Keep them in visual contact with other cattle.
• Try to ensure loading ramps and handling chutes are designed to minimize the animals seeing distractions outside of the working area.  If cattle can see moving objects and people through the sides it may impede their movement forward. 
• Check for chains, backstops, dogs, or people distractions if cattle are not moving readily through the alley or chute. 
• It may help to make sure the area you are moving the cattle into is adequately lighted.
• Paint the handling facilities a single uniform color because cattle may balk at a sudden change in color.

Cattle have a wider range of hearing than most humans.  However, they can locate the source of sound as well as human hearing allows. They are sensitive to high frequency sounds.  With this in mind, we can expect that loud noises in working facilities should be avoided, but small amount of noise can assist in moving livestock.  Noisy gates and other equipment can cause cattle to balk and resist moving forward. 

 

Producers have long been aware that proper handling management based on their knowledge of animal behavior will reduce stress and behavior related issues.  Improper handling that does not consider animal behavior may lower conception rates, reduce immune and rumen function, increase other health problems, cause excessive shrink, and bruising.  Make sure to adequately instruct employees of your expectations for low stress cattle handling techniques.

 

For more information on the Beef Quality Assurance program, or to become a beef quality assurance certified producer, visit BQA.org or contact your county extension agriculture educator.