Numbers Rule
By Dennis Sun
For those in the agricultural business, this time of year is usually spent planning or considering if previously made plans will work. To make those plans, we have to look at what crop and livestock inventories are telling us. These inventories hold critical information.
It is really tough to plan for livestock – especially cattle. For example, if one plans to breed heifers in May or June, they will not market those calves for nearly 18 months after breeding. If they sell as yearlings, they add another 10 to 12 months.
We get inventory statistics from the United States Department of Agriculture’s (USDA) National Agricultural Statistics Service (NASS). Producers have to be careful though, as NASS revises those statistics during the year, and this year is no different.
On Jan. 1, USDA revised the 2020 calf crop down 260,000 head from their July 2020 report. The current number of calves is 35.1 million head, down 456,000 head compared to 2019 numbers.
The number of calves born in 2021 is targeted to be smaller yet. With these numbers, CattleFax has adjusted its 2021 fed cattle slaughter forecast 300,000 head lower to reflect the smaller available supply.
Cow slaughter numbers are also expected to be lower in 2021. Statistics are telling us this number will be around 180,000 head lower. Those numbers will have telling figures for the cow slaughter unless dairies have a large sell-off.
As with all commodities, livestock, crops and their product prices are guided by supply and demand. If demand stays current with the last 12 months, this would mean the end product – meat – will go up in price along with cows and calves. The nation’s economy, restaurant business and meat exports will tell the story.
In the beef business, the consumer and the product are the important parts. The product has to be healthy, tasteful and tender.
With the ongoing pandemic and loss of the restaurant business, the consumer wants their beef to be all of the above and something they can cook in around 30 minutes. The newer cuts developed under the beef checkoff have helped to provide these products to help guarantee the demand.
It is up to beef producers to provide the supply. During this pandemic, cattle producers had issues with meatpackers, but those issues were out of their control.
Last week, there were 653,000 head of cattle slaughtered. This number is what is important to the supplier. If it gets too low, the price of beef in the meat counter will go up too high and turn the consumer onto more affordable protein like pork and chicken, as well as fake meat products. It is a balancing act for profitability and supply.
The question now, for the sake of planning, is what the drought in our area might look like, and only La Niña knows. We seem to be following the same weather pattern we saw in the winter and spring of 2012, which is not favorable. But, this is weather we’re talking about and we all know, weather has a mind of its own.
