Average profit expected to drop to $45 per cow in 2017
Ranchers continue to aggressively grow cow herds. The total three-year herd expansion, 2014 through 2016, is the largest since the 1970s.
The USDA–National Agricultural Statistics Service (NASS) Cattle Inventory report counted 93.6 million cattle and calves on Jan. 1 of this year, 2% more than a year ago. Beef cow numbers totaled 31.2 million head, a 3.5% increase from 2016, and 6% more than just two years ago. The beef cow herd is 2.1 million head larger than the low point of 29 million head in 2014 and the largest since 2010.
“Expansion is the result of profits and ample forage supplies,” says John Nalivka, president, Sterling Marketing Inc. “While the profits of two years ago have diminished significantly, range and pasture conditions throughout cattle country have continued to support herd expansion.”
Nalivka says the beef cow slaughter rate in 2016 totaled 2.58 million, which represents 8.6% of the cow herd and is the fourth smallest percentage of cows slaughtered since at least 1965.
While cow culling this past year was slow, ranchers added 6.42 million beef replacement heifers on Jan. 1, a 1.2% increase from 2016 and a 5% increase from two years ago. Beef replacement heifer numbers were the largest on farms and ranches since 1997.
Of those replacements, 62.3% or 4 million heifers were reported to be bred to calve. This is the highest percentage since 2010.
The positive side to herd expansion, says Lee Schulz, Iowa State University Extension economist: “We currently have one of the youngest herds in history. A young herd should be very productive, a plus in terms of cost of production and efficiency.”
USDA–NASS estimated the 2016 calf crop at 35.1 million head, up 3% from 2015. Analysts believe expansion will continue into 2018, further pressuring calf and feeder prices.