Replacement Heifer Dynamics

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

 

Drought-accelerated herd liquidation the past two years has made the beef cow herd the smallest in 61 years.  With continuing drought conditions, it is uncertain when, but it is certain that there will strong interest in rebuilding the herd whenever conditions permit.  Leaving aside the question of more drought, what is possible in 2023 given current availability of replacement heifers?

 

The number of beef replacement heifers on January 1, 2023 was 5.16 million head, down 5.8 percent year over year. This follows a 5.5 percent year over year decrease in 2022.  Beef replacement heifers represented 17.9 percent of the beef cow herd on January 1, the lowest proportion of beef replacement heifers since 2012.  Beef replacement heifers average 18.4 percent of the beef cow herd, and during the last herd expansion, beef replacements reached a cyclical peak level of 21.0 percent of the beef cow herd.  The reported inventory of beef replacement heifers consists of bred heifers and heifer calves in development for breeding.

 

For the past 23 years, USDA-NASS has provided a total number of the beef replacement heifers that will calve in the current year.  These bred heifers typically make up about 61 percent of the total beef replacements.  The number of bred heifers on January 1, 2023 was 3.17 million head, 61.4 percent of the total beef replacement heifers.  The number of bred heifers on January 1 was down 5.1 percent year over year and was the lowest beef bred heifer total since 2011.  This follows a 4.8 percent year over decrease in bred heifers in 2021.

 

Subtracting the number of beef bred heifers from the total beef replacement heifer inventory leaves the number of heifer calves in development to be bred this year.  This calculated total of replacement heifer calves for 2023 was 1.995 million head, the lowest in the data series.  This total was down 6.9 percent year over year and follows a 6.1 percent year over year decline in 2022.  These beef replacement heifer calves are assumed to have been retained from last year’s calf crop and will become bred heifers next year. 

 

The number of beef replacement heifer calves each year is not enough to account for the total inventory of bred heifers the following year.  Over the past 20 years, the number of beef replacement heifer calves represents 63.8 percent of the bred heifers the following year.  This means that extra heifers were bred during the year that were not reported as replacement heifers on January 1.  These extra heifers are assumed to come out of the inventory of other heifers.  For example, on January 1, 2023, the inventory of bred beef heifers was 3.17 million head, made up of replacement heifer calves from last year (2.14 million head) and another 1.03 million head of extra heifers bred out of the inventory of other heifers from last year.  This calculated total 1.03 million head of extra heifers bred is the lowest total in the data back to 2001.  The calculated number of extra heifers bred decreased 12.1 percent year over year in 2021 and decreased another 1.8 percent in 2022. 

 

The decreased number of beef replacement heifer calves and extra beef heifers bred in 2021 and 2022 helps explain increased heifer slaughter the past two years.  Heifers diverted from breeding to feeding contributed to the 4.0 percent year over year increase in 2021 and the 4.8 percent year over year increase in 2022 in heifer slaughter.  All of which contributes to the limited number of replacement heifers available in 2023.

 

The numbers suggest that beef cow herd expansion is not possible in 2023.  The available number of bred heifers, combined with a decrease in beef cow slaughter in excess of 20 percent lower year over year, might make it possible to hold the beef cow herd steady this year.  A low level of additional herd liquidation is more likely.  More likely in 2023 is increased retention of heifer calves and breeding of yearling heifers that will fuel herd expansion beginning in 2024.  If that happens, both beef cow and heifer slaughter will decrease sharply in 2023.  

 

Derrell Peel, OSU Extension livestock marketing specialist, discusses latest numbers from the USDA cattle inventory report on SunUp TV’s Livestock Marketing segment from February 18, 2023.

 

Spring 2023 - What’s a Good Bull Worth?

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

 

This week we revisit this age-old question based on the February 21, 2023 USDA Market Report.  The question 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!   

 

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 “cowboy 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 from Oklahoma National Stockyards:

 

523 lb. weaned steer calves (Large, 1) are worth about $2.31/lb. for a value of $1,208 per head. Therefore, if my future marketing plan is to sell weaned steers, $1,208 x 5 = $6,040 is the answer.

 

874 lb. yearling steers (Large, 1) are worth about $1.78/lb. for a value of $1,555 per head. Therefore, if my future marketing plan is to sell yearling steers, $1,555 x 5 = $7,775 is the answer.

 

1,400 lb. finished beef steers are worth $164.50/cwt live for a value of $2,303 each. Therefore, if my future marketing plan is to retain ownership through finishing and sell fed cattle on a carcass value basis, $2,303 x 5 = $11,515 is the answer.

 

So, in the current market, a good bull is worth somewhere between $6,040 - $11,515 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 key point illustrated here is that the longer you will own the offspring before marketing, the greater the value of the bull to your operation. 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.

 

I encourage cow-calf operations to consider their production system and marketing plan. Doing so dictates where to apply selection pressure.  Genetics pay when you purchase a bull capable of improving genetic potential for the specific traits that will translate to added value at your intended marketing endpoint.

 

Keep the following chart in mind as another way to evaluate ownership cost of bulls on a per cow or annual basis.

 

Table 1. Example of ownership cost of bulls on a per cow or annual basis.

 

Dr. Mark Johnson discussed the value of a good bull from SunUpTV on February 28, 2022.

 

Reflecting on the 2022-2023 OQBN Sale Season

Paul Vining, Oklahoma State University State Extension OQBN Coordinator

 

Oklahoma Quality Beef Network (OQBN) Vac-45 sales recently wrapped up with the final winter sale held on February 7th at McAlester Livestock Auction. I would like to express my gratitude to the Oklahoma State University Extension Specialists, Area Livestock Educators, and County Educators that make this program a continued success. Oklahoma’s cow-calf producers persevered through many challenges in 2022. Raising cattle during prolonged drought conditions while contending with exorbitant feed and fertilizer costs is difficult, requiring determination and deserving admiration. The livestock auction facilities that held OQBN Vac-45 sanctioned sales have been top-notch hosts. Even with drought and elevated input costs over 3,200 calves from 61 different ranches were enrolled in the OQBN Vac-45 Program, matching last year’s participation. A memorable highlight was Leflore County Stockyard in Wister, OK holding its first OQBN-sanctioned sale in December and selling over 800 OQBN calves.  I would like to offer a sincere “thank you” to all involved with the program, and I look forward to future program growth and success.

 

For calves to be eligible to participate in the OQBN Vac-45 Program calves must be, castrated, dehorned, and weaned for a minimum of 45 days prior to the date of sale. Calves must be vaccinated twice against respiratory (BRD) pathogens, and twice against clostridial bacteria (blackleg vaccinations) prior to sale. While many beef calf preconditioning programs are available, the OQBN Vac-45 and a few other programs have the unique requirement of third-party verification. Following program enrollment, an extension educator will conduct a ranch visit and verify that calves meet the necessary requirements to participate in an OQBN-sanctioned sale. This extra step in the preconditioning process provides ranchers and buyers with added confidence that OQBN calves will remain healthy upon entering the next phase of the beef supply chain.

 

On average calves participating in OQBN sales received premiums over similar non-preconditioned calves selling in the same sale. Recent sale data is being analyzed and overall premiums for OQBN calves sold in the past sale season (2022-2023) should be available soon. Past sale data compiled by Oklahoma State University Extension Professionals from 2011 to 2021 indicated an average market premium of $12.55/cwt for OQBN calves compared to similar non-preconditioned calves selling in the same sales. We expect this trend to continue for the foreseeable future, due to the continued demand for preconditioned beef calves.

 

Dr. Mark Johnson talks about preconditioning and adding value to calves on SunUp TV from July 3, 2021.