It’s a great time of year! We are in the heart of shipping season, and for most, it couldn’t have come soon enough. It’s been an awfully interesting year, and the markets are responding accordingly. At this point, why would we expect anything to be normal?
As the trucks are loaded and calves head to their new homes, it’s a great opportunity to reflect on decisions made over the past couple of years and make those changes needed for improvement. Genetic selections, vaccination programs, value-added programs, pasture management and so on can all be reflected on. It’s a great time to create your individual short- and long-term plans for your operation. As turbulent as the past couple of years have been, this year feels like it is affording us all the chance to level things out and prepare for future years.
Last winter’s miseries are slowly becoming a memory, but it’s affecting decisions on every ranch. Calf death loss in the western U.S. was astronomical. Some ranches reported as much as 40% death loss, while most maintained in the 20% range—still far greater than normal. Moving to this spring, everything dried out so drastically before late spring, and early summer’s moisture rebounded and catapulted the rest of the summer. This year’s calves have had everything thrown at them from Day 1, and a lot of guys are telling me their shipping weights are reflecting this. You’d think in a year like the West had with moisture that calves would be coming in fat and heavy, but they aren’t. Whether the feed was too washy or there were a couple dry months this spring, calves are generally lighter compared to previous years.
There are several factors at work right now in all levels of the chain. Simple fundamentals of filling a contract are forcing some to be more creative than usual. We’ve beat the talking point about the small cow herd to death, but couple this with higher death loss and calves coming in lighter than expected, and there’s simply less paid weight leaving the ranch. Also keep in mind that 44% of the nation was in drought conditions this year, so higher hay costs and low feed sources have also pushed more cattle on trucks.
Now factor in the paper. With interest rates nearing 10% and inputs at all-time highs, guys are simply forcing themselves to sell into the replacement pen. It makes sense, though, since they are worth so much more. With this, and a strong cull cow market, ranchers are finding ways to make it all work. Between added heifer sales and cull cows, it’s the easiest way to offset potential losses this year.
In the September Cattle on Feed report, heifers made up 39.9% of feedlot placements. The prediction was for it to come down to the low 30% range going into the fall months as producers have historically held back replacements; however, the latest report showed otherwise. Heifer placements surpassed the 40% level, assisting in the report showing an increase in feedlot inventory over last year by a full percentage point. This level of heifer placement is a huge number compared to historical data. It’s the highest percentage of heifers on feed in nearly two decades.
Cow slaughter continues to surprise us all. Even in the strong market, cow slaughter pace in October was one of the highest in the last 20 years! The incentive is there to sell them right now and the economic pressure at home far outweighs holding on to a cow longer than necessary.
The October Cattle on Feed report moved the markets fairly drastically and contracts took the biggest hit, as one would expect. Although the cash market has stayed strong, it puts additional pressure on the November report to see how 2023’s calf crop has been handled.
The interesting thing to watch is how Texas and Oklahoma respond to recent moisture. During the last of October, some parts of Texas received over eight inches of rain! How this area responds could really drive the bred female market, which has somehow been the area that hasn’t rallied with the rest of the market.
Each month of data like the aforementioned should extend the length of time we enjoy these calf markets. As mentioned in previous columns, though, it isn’t so much joy as it is a sigh of relief. The November data that comes out in two weeks will carry a lot of weight as it will help us to determine cow numbers and feedlot/packer reactions to this summer’s moves and how things are shaping up for 2024. — LOGAN IPSEN
