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Worsening forage production, drought impacting beef cow herd liquidation

Declining grazing land conditions and an on-going drought in parts of the country could speed up beef cow herd liquidation, according to a livestock marketing and risk management economist.

Elliot Dennis with the University of Nebraska-Lincoln says Western and Pacific states are being the hardest hit. “It really depends on where we’re at in the cattle cycle and what producer’s expectations of the prices are moving forward.  We are seeing cull cow rates go up and it’s highly regionalized right now.” 

Dennis says the U.S.’s pasture and forage conditions are nearly four times worse at 45 percent rated poor to very poor compared to the five-year average of 12 percent.

Dennis tells Brownfield herd liquidation started in 2019 because of peak inventory and the process has continued. “In the Midwest, I think it will be a tossup if producers feel like they can get through the season and they believe prices can recover we won’t see quite as much herd liquidation.”

He says the fastest cow/cull rates are happening in states like New Mexico and Colorado.

Dennis says while cow/calf liquidations will affect prices more regionally, there will be feeder cattle pricing dynamics to watch nationwide. “A feedlot sitting in the middle of Nebraska, or a stocker operation could buy calves cheaper in drought-affected areas like New Mexico and ship them to Nebraska and feed them cheaper than they could if they went and go local cattle or southeastern cattle that they typically buy,” he says.

Elliot says producers can utilize livestock risk protection programs.