August 20, 2024

 

Texas, US cattle ranchers face slow herd rebuilding amid improved forage conditions

Forage conditions in Texas, US have improved, offering relief to cattle ranchers across the state, but the process of rebuilding the state-wide herd has been slow, according to experts from Texas A&M AgriLife Extension Service, Drovers reported.

 

Dr Jason Cleere, an AgriLife Extension beef cattle specialist in the Texas A&M Department of Animal Science, Bryan-College Station, reported that soil moisture, grazing conditions, and hay supplies have improved this year, leading to increased optimism among cattle producers.

 

Despite these improved conditions, ranchers in Texas have not yet begun retaining heifers or purchasing replacement heifers and young bred cows at a rate that signals significant herd growth.

 

The size of Texas' cattle herd influences national beef cattle markets, from local sale barns to grocery store meat counters. Texas accounts for approximately 14.6% of the nation's beef cattle.

 

"There is a lot of optimism based on calf prices, the moisture a lot of the state has received, and the potential for more moisture going into fall," Cleere said. "But overall, our market outlook experts are saying we haven't started rebuilding yet."

 

Ranchers are cautiously re-entering the cattle market following two years of drought across the state, contrasting with their more aggressive rebuilding efforts after the historic 2011-2012 drought.

 

Between 2010 and 2014, Texas' beef cattle herd shrank from 5.14 million head to 3.9 million head. Producers, however, quickly rebuilt the herd during that time to take advantage of record-high calf prices in 2014.

 

In 2011, the weekly weighted average price for 500–600-pound steers at Texas auctions were US$139.73 per hundredweight. By 2014, that average had risen to US$236 per hundredweight, with a peak of US$283 per hundredweight in October of that year. Recent prices have surpassed these records, with feeder steers weighing 500-550 pounds selling for US$333.38 per hundredweight in March and averaging US$316.40 per hundredweight since July 2023.

 

Dr David Anderson, an AgriLife Extension economist and professor in the Department of Agricultural Economics at Bryan-College Station, noted that producers are approaching herd rebuilding more cautiously this time around due to reduced net profit opportunities compared to a decade ago.

 

"The financials aren't the same as they were last time," Anderson said. "Costs are higher, interest rates are higher, and that makes producers more cautious, resulting in slower rebuilding."

 

In 2019, Texas had 4.65 million beef cattle, but by February 2023, after two consecutive years of drought and poor forage production, that number fell to its lowest level since 1961.

 

Anderson anticipates the US Department of Agriculture's January 2025 cattle inventory report to show further declines, based on the high number of heifers being sent to feedlots and cows going to meat packers.

 

Cleere explained that rebuilding a cattle herd is a lengthy process. Producers need to retain more heifers, future calf-producers, than cows that are aging out of productivity. For instance, a producer with 100 cows and a cull rate of 15% per year must hold back at least 15 heifers to maintain the herd. If the producer had 150 cows before the drought reduced stocking rates, their decisions regarding holding, selling, or buying replacement heifers will determine how quickly the operation can return to its previous capacity.

 

Both Cleere and Anderson agreed that the historically high prices for cattle are a factor in producers' decisions about whether to retain heifers, which will produce a calf around nine months after reaching maturity.

 

"Prices have been so strong that a check in hand for that heifer seems more attractive than the potential earnings from future calf production," Anderson said. "Producers are weighing the current prices against what those prices might be when the heifer eventually calves."

 

The rapid herd rebuild in 2015 led to price drops that left many producers in a difficult position, having overpaid for replacement heifers relative to the sale prices for their calves, Cleere noted. This time, producers are making more conservative decisions due to tighter margins.

 

Despite the improved forage outlook, some parts of Texas continue to experience extreme drought, while others are starting to dry out again. This has added to the cautious approach many producers are taking in deciding stocking rates.

 

Cleere emphasised that this is a time for producers to focus on optimizing their operations. This includes protecting forage and hay fields from armyworms, deworming, and vaccinating to minimise losses, and utilising low-cost inputs like growth implants to help calves gain weight.

 

"The good news is that market fundamentals suggest a strong run of cattle prices," Cleere said. "With improved hay and forage conditions, I think some producers will start holding back heifers, but even with high prices, they're facing higher costs and need to focus on maximising every pound their calves gain and every dollar they can earn at the sale barn."

 

-      Drovers