Source: Rita Jane Gabbett, MEATINGPLACE, 11/29/13

Feeder heifer and heifer calf prices have recently begun moving higher amid mounting indications of cowherd expansion and improving prospects for winter wheat grazing, according to USDA.

Early signs include declining beef cow slaughter and the apparent beginnings of heifer retention. Both factors will exacerbate declining beef production, likely beginning in the first half of 2014, the agency predicted in its latest Livestock, Dairy and Poultry Outlook report.

Although it is a reversible decision, retaining heifers for replacing cows or expanding the cowherd removes them from the pool of heifers available for placement in feedlots for beef production. Heifers generally account for roughly 37 to 38 percent of total steers and heifers on feed, but can bulge to 40 percent during liquidation and shrink to 33 percent during herd expansion.  This swing in the heifer proportion of cattle on feed can represent a significant quantity of beef; but not for a while.

Replacement heifer calves from the 2013 calf crop will be retained over the winter, bred in 2014, will calve in 2015, and their calves will begin to contribute to beef production probably no sooner than the last half of 2016. Annual fed beef production is not likely to begin increasing above recent and current levels until 2017 or later, USDA predicted.

At the same time, fewer cows being culled from herds will reduce the quantity of non-fed beef produced in the short run. Further, fewer cows result in fewer calves, so again, until the inventories of beef cows and heifers that have calved exceed current levels, beef production is not likely to increase much, if at all.
Fewer cows in the slaughter mix can also result in tighter supplies of processing beef and can adversely affect the price of 50-percent lean trim because there may not be sufficient supplies of processing beef to blend with lean trim to produce ground beef products, USDA warned.

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