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The Midwest Cattleman · March 10, 2022 · P6
        Cattle Cycle Scenario 2: Drought Abates

                                                 By Derrell S. Peel, OSU Extension Livestock Marketing Specialist

         A previous article (Feb. 24)  have producers interested  percent.  An even lower cull- cows.  Achieving herd expan-
      considered what continued  in slowing liquidation, hold- ing rate might be possible… sion is likely not feasible and
      drought might force the in- ing cattle numbers steady or  the average culling rate in  even holding the herd to zero
      dustry to do in terms of addi- even expanding.    However,  the last herd expansion from  change stretches the num-
      tional herd  liquidation.    An- the extent to which higher  2014-2018 was 8.7 percent… bers to unlikely levels.  If the
      other scenario is that drought  prices leads to expectations of  but it doesn’t seem likely that  industry does try to minimize
      across the country subsides  higher profitability (and a de- expansion signals are that  herd liquidation in 2022 and
      and is not a significant fac- sire to expand the herd) will  strong yet.                                prepare for later herd expan-
      tor in 2022.    The question  be tempered by higher feed                The other component of  sion, the reduction in cow and
      then  becomes what  will  the  and other input costs.                 herd expansion is heifer re- heifer slaughter could result
      industry try to do and to             For producers affected by  tention.  The drought impacts  in a larger decrease in beef
      what extent will it be able to  drought in 2021, the first step  from 2021 determine what is  production this year than is
      do that? The cyclical peak in  will be herd rebuilding.  The  possible in 2022.  The number  currently forecast.
      the beef cow herd inventory  overall beef cow culling rate  of beef replacement heifers                    The most likely scenario is
      was in 2019 and the indus- in 2021 was 11.55 percent,  on January 1 was down 3.3  probably somewhere in-be-
      try has been in  liquidation  the highest since 2011.    In  percent year over year with  tween the severe drought and
      for  three  years,  significant- drought areas, producers who  the  subset  of  those  that  are  no drought scenarios, with
      ly enhanced by drought in  culled heavily last year may  expected to calve this year  some drought continuing in
      2021 and to a minor extent  be able to sharply reduce cull- down 2.8 percent from last  some regions. The result could
      in 2020.  If drought is not a  ing this year if forage condi- year.  The reduced inventory  be modest levels of addition-
      limitation  in 2022,  will cat- tions improve.  In other areas  of replacement heifers sig- al beef cow herd liquidation
      tle producers continue herd  producers may hold cow cull- nificantly limits possible herd  in 2022, perhaps less severe
      liquidation? The answer will  ing to a minimum.  After in- changes in 2022.  It appears  than 2021 but still significant
      be determined by what cattle  creasing sharply in 2021, beef  to me that the most aggres- continued reduction in the
      producers want to do and can  cow slaughter could drop by  sive 2022 scenario is for the  beef cow inventory. It is likely
      do relative to cow culling and  as much as 10-15 percent year  industry to hold the beef cow  that cattle numbers will con-
      heifer retention.  Higher cat- over year in 2022.  This would  herd to  a low level of  liqui- tinue to tighten in 2022.
      tle prices and expectations of  result  in  a  beef  cow  culling  dation…perhaps a 0.5 per-
      continued higher prices may  rate between 10 and 10.5  cent or less reduction in beef

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