Texas A&M AgriLife Extension Service experts expect several factors to continue working against a rebuild of the Texas beef cattle herd. The latest U.S. Department of Agriculture beef cattle inventory survey showed the U.S. herd had shrunk another 0.6% to 27.68 million head.
Texas’ beef cattle herd grew by 60,000 head to 4.02 million over last year, according to the USDA report.
Texas beef cattle prices reaching new heights
The historically strong beef cattle market, high input costs and longer-term concerns about drought have stymied a herd rebuild, said Jason Cleere, Ph.D., AgriLife Extension statewide beef cattle specialist, and David Anderson, Ph.D., AgriLife Extension livestock and food product economist, both in Bryan-College Station.
Anderson, professor in the Texas A&M Department of Agricultural Economics, said 400-500-pound calves averaged $3.89 per pound in the Southern Plains market that includes North Texas and Oklahoma. That weight class of calf sold for $3.29 per pound at the same time last year.
“That’s outrageously high,” he said. “But the lower cattle numbers mean the pressure is going to be on higher calf prices.”
Cleere, associate professor in the Texas A&M Department of Animal Science, said even the salvage values for older cows and bulls is at record highs.
“From a rancher perspective, it’s great to see a 2,000-pound bull selling as a packer for $2,500-$3,000,” he said. “So, if salvage values and demand is so high, it’s just another snapshot of how unprecedented the cattle market is.”
Beef cattle prices are up, but so are costs
Despite the unprecedented market, Cleere said producers are finding it more challenging to find profits due to higher input costs. Everything in ranching costs more than the previous price surge following the 2011 drought.
Cleere said inflation-adjusted prices for a 550-pound calf are lower than in 2013-2014 when ranchers were realizing better margins.
“Ranchers need these record-high prices because it costs more to raise that same 550-pound calf,” he said.
Optimism among Texas ranchers is brimming, especially in areas of the state east of Interstate 35 historically known for forage and beef cattle production. Price outlooks are good, and consistent rainfall have set the stage for a strong spring green-up and flush of cool-season forages.
The flush of cool-season forages like ryegrass and legumes can pack pounds on spring calves and help cows recover for breeding, Cleere said.
Despite the good market and moisture outlooks, Cleere said Texas ranchers have not yet held back heifers above replacement percentages in ways that indicate a herd rebuild.
“The weather has been encouraging, and some ranchers may be thinking about keeping more heifers, but that has to hold,” he said. “Ranchers have good memories, and they may be thinking about the next drought.”
Texas cattle producers proceeding with caution
Cleere said many ranchers may also remember how drastically the beef cattle market dropped in 2016 after a rapid herd rebuild. Ranchers paid top dollar for replacement heifers with the expectation that prices would remain high or go higher. But prices fell, which meant losses at sale barns for the subsequent calves produced by those high-cost heifers.
After the 2012 drought, prices for a 400-500-pound feeder steer peaked at $3.17 per pound in May 2015, Anderson said. By December 2015 those steers brought $1.97 per pound.
That cautious approach, higher input costs and long-term weather outlook for more drought for Texas will likely mean the state never reaches its previous herd numbers again, Cleere said. Land-use changes and fragmentation due to population growth are also taking ranches, forage production, pastures and rangeland out of Texas’ beef cattle production system.
“You see it, even in rural areas, so the reality is, if you look back 10 years, we’re not going to see those same cow/calf numbers that we once did,” he said. “The only thing that would change that is if inputs like fertilizer were dirt cheap so ranchers could ramp up their stocking rates.”
Optimize or maximize production
Despite the challenges, Cleere said Texas cattle ranchers should have good opportunities the next few years. He expects strong price trends to continue and recommends ranchers look for ways to reduce costs and increase profits.
Cleere said it could mean selling calves earlier or later depending on market prices and quality forage availability and/or focusing on cows’ post calving body condition. Smart, timely investments in nutritional supplements or fertilizer applications can provide long-term benefits for operations.
“In this business we oftentimes say optimizing production is the better strategy than maximizing production, but there are times in the cycle where maximizing potential may be the better strategy,” he said. “So, planning for next year’s calf crop by taking care of your productive cows’ nutrition, and helping ease that breed-back could reap big rewards.”
