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Cow Herd Liquidation Continues

Cow Herd Liquidation Continues

As drought persists, cow herd liquidation continues. Dr. Derrell Peel, Oklahoma State University Extension Livestock Market Economist, explains.

“There is little doubt that the drought is accelerating the herd liquidation. It started last year. We were already in cyclical liquidation, again, from that peak in 2019, but the drought last year accelerated it, the drought this year has accelerated it even more, and it’s taken us lower than we really want to be or frankly need to be. But Mother Nature is in control here right now, and until things change, we won’t be able to stop this liquidation. Then we’ll stabilize and then we’ll try to turn around and rebuild this thing. And that’s all going to play out over the next one to three years.”

Bob Rodenberger with Stockman Oklahoman says most of the cattle producers he is working with are doing a good job of orderly liquidation.

“We’re looking at 2011 and 12 again. The thing that we’re seeing that we didn’t see then is a higher market in the middle of the drought, we did not see a higher market in 2011 and 12 till the end of 13 and 14. And if you think back, that’s when the rain, we finally got restock and reestablished our grasses and our wheat pasture, and then the market came back. And we’re maintaining a good killing cow market, a good stocker market, and a good feeder market through all this. So, there’s optimism down the road.”

Dr. Peel says that if wheat pasture does become available, he believes that it could be used somewhat differently than usual for this fall and winter, given the limited hay supply. Proportionately, more wheat pasture is likely to be used for cow herds than for stocker production. Even if there is wheat pasture, stocker demand may be a little lighter than usual this year, however, the fall run of calves may also be smaller than usual, so that will balance out.

But one economist says he expects better days ahead.

Lance Zimmermann, beef industry research analyst with Rabobank, anticipates the current herd contraction nationwide will continue. But he sees a path forward for struggling cattle producers.

“But I do believe that the tighter cattle numbers and the liquidation that we went through since the 2019 highs, we’ve got a lot of cattle producers who could enjoy some prosperity, at a level we haven’t seen for at least three years, certainly for many we haven’t seen in five years or more. And so, I think that it’s an exciting time, when you look at the global markets as well, they’re going to offer a lot of opportunity down the road for us. Our consumer basis is pretty mature. So, the best opportunity to grow our consumer base is going to be outside of the United States, and that’s going to have to continue to be a focus for us going forward.”