Halfway through the year, Oklahoma State University Extension Livestock Market Economist, Derrell Peel, says, the first half of the year was challenging for our beef cattle producers.
“We started the year with having kind of turned the corner from a cattle price standpoint, prices have been above your go levels. But we’ve been waiting for some other pieces to fall in place in terms of feedlot production and that leading to beef production, and we haven’t really seen that happen yet. So, our annual expectation for beef production in 2022 is for a decrease from 2021’s record level, and yet in the first half of the year beef production was still up by about one percent.”
Despite that, Peel expects a decrease in beef production in the second half of the year.
“That means that we’re going to see some things a little bit different here in the second half of the year, namely cattle slaughter has to decrease, and of course, we’re watching carcass weights too, and they have come down to about equal to a year ago levels or following a seasonal pattern pretty close, but it’s really the slaughter issues. Cow slaughter continues to be elevated and that’s drought related, clearly. It started last year has continued into this year, and that will probably continue for the rest of the summer at some level.”
The real key is going to be the fed steer and heifer slaughter, according to Peel, who says steer slaughter is down this year as expected, but offset by heifer slaughter, which remains elevated because of drought.
“The drought has kind of moved around regionally and we’ve seen this before. It goes all the way back to 2020. The drought started in the southwest part of the U.S. 2021, it was really focused on the northern plains and the northern Rocky Mountain region. That’s improved somewhat up there. But now it’s much more severely in Texas and parts of the southern plains. And so, we continue to see drought impacts affecting cow slaughter and obviously behind that is the fact that we’re just not producing the forage the pasture and hay and these drought regions.”
Add to that, supply chain issues are another problem.
“Obviously we’ve seen significantly higher prices across the board for inputs and that’s had a big impact in areas that don’t have drought. We know that forage production is going to be down, both pasture and hay production, simply because producers, based on the prices of fuel and fertilizer, have cut back on those inputs this year. So, we’re going to see impacts outside of the drought regions in addition to the continuing drought impacts that we see.”
Overall cattle numbers have been declining since peaking in 2019, Peel says, yet the industry has not pushed the last bit of numbers through the feedlot.