Cow inventories – Are we still liquidating

“With tighter supplies in the future, cattle prices are expected to remain strong,” says Ann Boyda, provincial livestock market analyst with the Alberta government.

Total July 1 cattle inventory on Alberta beef operations of 5.8 million head is estimated to be down 2.5% from last year, a continued slide from the previous 1.5% decrease reported for July 1, 2021. July 1 inventory of calves under one year of age reveal comparable trends, down 5.2% from 2022, following a 3.4% decrease from 2021.

Chart 1. Calves, under 1 year, on Alberta cow-calf operations on July 1, 2023

Source: Statistics Canada, Table: 32-10-0130-01

“What do these trends mean for the cattle business? Cattle producers are known for taking a long-term view of their business. Decisions around cow culling are tough,” says Boyda.

As of the week ending September 2, 2023, the Canadian Beef Grading Agency reported year to date total cattle slaughter in federally inspected plants for Western Canada of 1.749 million head, down 5% from the same period in 2022. However, cow slaughter for Western Canada of 241,731 head was 2% higher and heifer slaughter was 6% lower than the same period in 2022.

According to Statistics Canada, the number of beef cows on Alberta cow-calf operations dropped only 0.4% from July 1, 2022, whereas heifers retained for beef replacement declined by 1.3%.

“Beef cow longevity can be a major factor affecting costs and the productive life is a consideration in dry conditions,” explains Boyda. “Greater longevity can allow producers to retain fewer replacement heifers. Cows between 4 and 8 years of age typically have repaid their development costs and can contribute to revenue, especially considering higher calf prices. These decisions are more critical in times of dry conditions and high feeder prices.

“Consideration may also be given to the anticipated value of bred heifers. Is there an opportunity in 2024 to make money on bred heifers if calf prices hold? Feed costs also factor into the decision. If resources are available, producers can afford to be more selective about which cows to keep.”

International markets also influence producer decisions. Like Canada, the U.S. calf market was strong throughout summer, and supplies are tight. U.S. utility cow prices remain near their highs of the year. U.S. beef cow slaughter was 2.16 million head year to date (January through August 2023), down 13.%.

“Demand for trimmings is supporting cull values,” points out Boyda. “Drought impacts on U.S. southern plains is anticipated to decrease the demand for breeding females and further limit herd expansion. Rabobank has forecast beef production to decline in the third quarter of 2023 but return to former 2022 levels by fourth quarter.”

For more information, see:

Agricultural Marketing Guide

Contact

Connect with Ann Boyda for more information:

Phone: 780-422-4088
Email: [email protected]