Texas ranchers optimistic amid slow beef herd rebuild
Sarah Fuller Wed, 08/28/2024 - 06:52 Image
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Forage conditions have improved for Texas cattle ranchers, but rebuilding the statewide herd has been slow, said Texas A&M AgriLife Extension Service experts.
Jason Cleere, Ph.D., AgriLife Extension beef cattle specialist in the Texas A&M Department of Animal Science, Bryan-College Station, said soil moisture, grazing conditions and hay supplies this year improved optimism among cattle producers in many parts of the state. But so far, Texas ranchers have not been holding back heifers or buying replacement heifers and young bred cows at rates that indicate growth.
The size of Texas’ herd ripples into the supply side of national beef cattle markets from sale barns to grocery store meat counters. The state carries around 14.6% of the nation’s beef cattle.
“There is a lot of optimism based on calf prices, the moisture a lot of the state has gotten, and the potential for moisture going into fall,” Cleere said. “But in the grand scheme of things our market outlook experts are saying we haven’t started rebuilding yet.”
Texas ranchers cautious about herd rebuild
Ranchers are dipping their toes into the beef cattle market after two years of statewide drought compared to their dive into herd rebuilding following the historic 2011-2012 drought.
Texas’ beef cattle herd shrunk from 5.14 million head to 3.9 million head between 2010 and 2014. But producers rebuilt the herd quickly as they moved to take advantage of all-time high calf prices in 2014.
In 2011, the weekly weighted average price for 500-600-pound steers at auctions across Texas was $139.73 per hundredweight. By 2014, the weighted average for those steers rose to an average of $236 per hundredweight, with a peak of $283 per hundredweight in October.
Recent prices have eclipsed those records.
Feeder steers at 500-550 pounds were selling for $333.38 per hundredweight in March and have averaged $316.40 per hundredweight since July 2023.
However, David Anderson, Ph.D., AgriLife Extension economist and professor in the Department of Agricultural Economics, Bryan-College Station, said producers are moving more cautiously this time because the net profit opportunities are much lower than a decade ago.
“The dollars and cents of it isn’t the same as last time,” he said. “Costs are higher, interest rates are higher, and that makes producers proceed with more caution, which translates into slower rebuilding.”
Herds aren’t built in a day
There were 4.65 million beef cattle in Texas in 2019, but the number declined to the lowest point since 1961 by February 2023 after back-to-back years of drought and poor forage production.
Anderson said he expects the January 2025 U.S. Department of Agriculture cattle inventory report to show further declines based on the high numbers of heifers going to feedlots and cows going to meat packers.
Rebuilding a cattle herd takes years, Cleere said. Producers need to keep higher numbers of heifers – the young, future calfproducers – in their herds than cows that are aging out of productivity.
For example, a producer with 100 cows with a cull rate of 15% per year will need to hold back at least 15 heifers just to maintain their herd. If that producer was carrying 150 cows before drought forced them to reduce stocking rates, their decisions on holding, selling or even buying replacement heifers determine how quickly their operation reaches its previous capacity.
Cleere and Anderson agreed that historically high prices are factoring into producers’ decisions to hold heifers that will produce a calf around nine months after reaching maturity.
“Prices have been so good, that a check in the hand for that heifer looks better than the potential future earnings from her producing calves,” Anderson said. “It’s putting producers to a decision on prices they are seeing now or what those prices might be when she has a calf.”
Producers focus on profit potential
The rapid rebuild in 2015 led to price drops that left many producers in a position where they overpaid for replacement heifers in relation to sale prices they realized for her subsequent calves, Cleere said. Tighter margins are leading to more conservative decisions this time.
Despite improved forage outlooks, Cleere said some areas of Texas remain in extreme drought while others are beginning to dry, which also weighs on producers’ decisions about stocking rates.
Cleere said this is a time for producers to focus and optimize their operation’s output – whether it be protecting forage and hay fields from armyworms, deworming and vaccinating to minimize potential losses, or utilizing low-cost inputs like growth implants that can help pack pounds on calves.
“The good news is the market fundamentals are there for what should be a good run of cattle prices,” Cleere said. “With the hay and forage conditions like they are for a lot of producers, I think we’ll see some producers holding back heifers, but even with high prices, they’re facing higher costs and need to focus on every pound their calves can gain and every dime they can make at the sale barn.”
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