WEST LAFAYETTE, Ind. — The number of beef animals has been
in a downward spiral since 2007 due to drought, which has ravaged pastures, and
due to high prices of corn, soybean meal and forages.
Although expansion is expected to start slowly, the beef
industry is about to reverse a downward trend in numbers.
According to a Purdue University Extension economist,
prospects are brightening for a renewal of pastures and for a welcomed reduction
in feed prices.
“Pastures and ranges have returned to favorable conditions
for much of the country, including the Northeast, the Southeast, the Midwest and
the northern Great Plains,” said Chris Hurt. “Improvement is also noted for the
central and southern Plains, although drought conditions are still lingering.
Texas, Oklahoma and Kansas have received some recent rains that may help to
continue the abatement of drought. Nationally, 73 percent of pastures are rated
in the fair, good or excellent condition this year compared to only 46 percent
at this time last year.
“Markets are expecting feed prices to drop sharply when the
new-crop harvest gets under way. New-crop corn prices are about $2 per bushel
lower than nearby bids, and fall soybean meal prices could be as much as $200
per ton lower than current scarce old-crop offers.”
Beef cow operations in some parts of the country where
pastures have been restored probably are getting ready to retain heifers, Hurt
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. Another area that is ripe for herd expansion is the
“On the other hand, pasture and range recoveries have not
reached a critical mass for expansion in the central and southern Plains and
Western U.S.,” Hurt said. “These regions include 43 percent of the beef cows and
have had a 14-percent drop in those numbers since 2007. More rain and more
improvement in pastures and ranges will be required.”
According to Hurt, the 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. This is a large area
that currently has 57 percent of the nation’s beef cows.
“Lower feed prices alone will not be enough to get retention
started, but higher calf prices will be required, as well,” Hurt said. “That
process is also under way. Oklahoma 500- to 550-pound calves have increased by
about 15 cents per pound since early June, and 600- to 650-pound steer calves
have increased by 13 cents per pound. Current prices are $1.65 and $1.55 per
However, he added, these levels are not likely to stimulate
any major beef cow herd expansion. It is more likely that prices of $1.75 to $2
may be required to convince brood cow operations to move aggressively toward
“The already-low inventory of finished cattle and some added
heifer retention will keep beef supplies falling in the coming 12 months,” he
said. “The U.S. Department of Agriculture expects beef production to be down
about 4 percent in the last half of 2013 and by 5 percent in the first half of
“This should provide the foundation for finished beef prices
to average in the higher $120s to low $130s. These finished cattle prices, along
with lower feed prices, should propel calf prices back to $1.75 per pound and
Finished cattle prices are expected to trade in the low
$120s per hundredweight in the third quarter, but move to the higher $120s for
the final quarter of 2013.
First-half 2014 prices are expected to average near $130,
with early spring highs in the low to mid-$130s. Calf and feeder cattle prices
should follow the finished cattle prices higher, especially as feed prices also
“The industry may see the start of heifer retention this
fall, but the magnitude of expansion is expected to be low and slow to get under
way,” Hurt said.
“Beef cow producers know that expansion of the herd is a
long-term investment and generally want an extended period of favorable returns
before making major financial commitments. In addition, nearly half of the
country’s cows are in regions that have not yet fully emerged from the
He said that prices of calves may need to move closer to $2
per pound to provide the incentive that will provide for a more major beef
“Both the poultry and pork industries are set to increase
production rapidly as feed prices decline,” he said. “Retail beef prices,
already at record highs, will move even higher in the coming 12 months — at a
time when poultry and pork price increases are moderating or even falling. This
will mean stiff competition for beef among domestic and foreign consumers.”