Corn Belt sharing in cattle cutbacks
Though cattle producers and feeders in the southern Plains have faced the most dire market and herd health conditions because of the 2012 drought, the implications are far from geographically isolated to that area. Now, these producers' peers in the eastern Corn Belt find themselves staring down the barrel of a beef cow herd that's at its lowest size in more than 50 years.
But, it's not just been in the last year; the herd reduction underway's been in place since 2007, when feed costs started climbing and more land began its diversion from pasture to corn and soybean ground.
While beef herd numbers fell 9% in the southern Plains last year, the central Plains lost 6% of its herd. Though the herd losses weren't as steep last year in the eastern Corn Belt -- Ohio lost 3% and Indiana lost 2% -- 2012 was the culmination of years of herd cuts in the region stemming from a general trend toward more crop acres, says Purdue University Extension livestock economist Chris Hurt.
"The 2012 drought was the primary driver of the decrease last year as it destroyed pastures and forage supplies and catapulted corn, sorghum and soybean meal prices," Hurt says. "Larger crop and forage production would increase availability and lower prices of these critical feedstuffs. Given the small size of the calf crop, this would bolster calf prices."
Since 2007 when the drive toward more crop acres began, Hurt says Indiana's beef herd has shrunk 18%.
Improving weather conditions -- namely a move away from the current drought -- will improve feed costs and general conditions for cattle producers immensely, something that Hurt says producer have been awaiting in the eastern Corn Belt for a while. And, they're likely to respond in a major way.
"If weather helps restore feed and forage supplies this summer, a more aggressive expansion of beef heifers should be anticipated beginning in the fall of 2013 and continuing into 2014. Cheaper feed and increased heifer retention will set the stage for very strong calf prices and new record high prices for finished cattle in 2014," he says. "If crop and forage production return to near normal, the cattle industry is poised for multiple years of favorable returns and expansion."