Master cattleman quarterly, 12/2012, no.17

              In this issue:
-Which is a Better
Investment: The Stock
Market or Farmland?
2
New OSU Extension
Team Member: Gant
Mourer, Beef Cattle
Value Enhancement
Specialist
4
Importance of Genetic
Management in Multi
Sire Pastures
5
Farm Bill Update 6
Canola as a Source of
Protein for Cattle
7
Enterprise Budget
Software Can Make or
Save You Money
8
IFMAPS: A Free, Con-fidential
Service Avail-able
for Oklahoma
Producers
4
Master Cattleman Quarterly
Oklahoma State University
 Derrell Peel
 Roger Sahs
 Damona Doye
 Megan Rolf
 Jody Campiche
 Chris Richards
Vol. 17 Dec. 2012
Drought Has Pushed Us to the Point That We Are “Out of Cattle”
Derrell S. Peel, OSU Extension Livestock Marketing Specialist
Exactly two years ago I wrote an article
about the implications of declining cattle
numbers (“At What Point Do We Run Out of
Cattle”, Cow Calf Corner, November 15,
2010). In that article I suggested that after
many years of herd liquidation, we had
reached a point where it was not possible to
maintain beef production without herd re-building.
The article suggested that beef pro-duction
would drop without herd rebuilding
and that herd rebuilding would squeeze cattle
supplies even more in the short run. The arti-cle
further suggested that the only possible
postponement to those consequences would
be the temporary one if more herd liquidation
occurred.
Little did I know that November of 2010
was the beginning of the driest and warmest
year in Oklahoma and the Southern Plains.
The resulting cow liquidation and preempted
herd rebuilding that occurred in 2011 and
2012 delayed those impacts but has brought
to the point where the impacts I anticipated
many months ago are now upon us. Feedlot
placements have dropped sharply the last four
months and feedlot inventories are declining
and will continue to decline in the coming
months. In my mind the bigger question is
not why we have such a dramatic decrease in
feeder cattle supplies now but why it has tak-en
so long for the situation to manifest itself.
I believe there are several reasons.
The biggest and most obvious one is two
years of drought which provoked additional
liquidation, and postponed heifer retention
thereby moderating declining overall cattle
numbers. It seems to me that drought and
high cattle prices the last two years have had
the effect of bringing cattle “out of the bush-es”
in a way that we have not seen for many
years and may not be fully reflected in the
cattle inventory data. Another factor is veal
calf slaughter, which is a minor part of the
total, but responds as you would expect in
these conditions. Veal slaughter decreased
about 11 percent from 2008 to 2011 and is on
pace to decrease another 11 percent in 2012.
Compared to 2010, the decrease in veal
slaughter the past two years has added rough-ly
120,000 head to feeder supplies. Finally,
feeder cattle imports from Mexico and Cana-da
have augmented declining U.S. feeder sup-plies
since 2009. In the last two years, in-creased
feeder cattle imports have boosted
feeder supplies by roughly an additional
300,000 head. In the first half of 2012, Mexi-can
imports were continuing that trend with a
record pace of drought forced sales of cattle.
As we move into 2013, some things about
cattle supplies are more clear and some are
still uncertain. What’s clear is that two more
years of liquidation have put the industry in
an even deeper hole with respect to feeder
supplies. The 2013 U.S. calf crop will be the
smallest since 1942, based on my estimates.
What is also clear is that feeder cattle imports
will drop dramatically. Mexican cattle im-ports
have decreased sharply in late 2012 and
may decrease feeder supplies in 2013 by 600
to 800 thousand head year over year com-pared
to 2012. What is unclear is the drought
question. Continued drought will moderate
the short run effect by provoking more liqui-dation
and postponing heifer retention. If
drought conditions improve, herd inventories
will stabilize and some heifer retention may
begin in 2013.
Feedlots have not only placed fewer cat-tle
but recent placements have been heavier
weight and will move through feedlots faster.
It will be increasingly difficult to find place-ments
to follow current feedlot inventories.
A significant decrease in cattle slaughter and
beef production is unavoidable in 2013 and
2014. Continued drought may continue to
impact the timing somewhat, but any short
run moderation of tighter supplies due to
drought liquidation will be at the expense of
more drastic impacts later; just as the situa-tion
now is more drastic than it was two years
ago.