Dec. 29, 2011 - The calf and replacement cow markets are up and are expected to go higher, as cattle raisers consider buying back previously sold herds.
With moisture in much of the state in recent weeks, some optimistic cattle raisers are beginning to rebuild their herds, hopeful that winter pastures will sustain them. According to Jason Cleere, Texas AgriLife Extension Service beef cattle specialist, one of the biggest concerns is that many sold open cows with dwindling nutrition and those that are going to calve this year may be less likely to successfully be bred back, affecting future cattle numbers.
"In the short term, my concern is that producers that sold cattle have probably sold mostly open cattle," Cleere said. "So, what they have left is cows that have calved or cows that are going to calve as we move into late winter and into spring. What you see as you travel around the county here is that the cattle are stretched a little thinner than what we have in the past."
This stretch refers to body condition scores and possible nutrient and vitamin deficiencies. When producers begin to "stretch" their cattle, it can eventually begin to affect breeding ability.
"So the drought may quite possibly be influencing breed back," Cleere said. "Influencing not only this coming calf crop, but another two years from now. So, that is a big concern."
Cleere warns that even those bred and calving cattle that producers are retaining need to be evaluated and feed programs given a good evaluation.
"I think first and foremost, we need to try to -- for those cows that haven't calved they are going to be calving in January, February, March -- producers need to evaluate condition of those cows and maybe if they need to improve condition, go ahead and start making some changes now for the condition of those cows.
To protect future cattle numbers, producers likely need to provide additional nutrition for those cows and improve their condition before they calve, or maintain their condition if they are a little thinner when they start calving., all with hopes of increasing breeding ability and increasing weaning weights.
As the cattle market continues to be favorable for sellers, Cleere expects that normal trends will continue for the calf market. Although with the impending drought and lower supplies of cattle, it is tough to give a fool-proof forecast.
"As we move into the spring, we are going to see our typical calf prices increasing because of demand and supply of those cattle," he said. "From a producer's standpoint, we are going to be following a similar trend line as we normally would: Higher prices as we move into the spring and then as we move into the fall when people are selling cattle, we expect to see some of those prices to back off some. But, to an extent, who knows, because of the much lower supply of cattle out there."
While overall prices are good, supply of cattle is down and the reports seem to point towards the overall 2011 cattle market taking a hit in numbers.
"I have heard reports that our cow numbers will be down from Jan. 1 (2011) to this coming Jan. 1 -- we will be down about 12 to 13 percent," Cleere said. "Some numbers have been as high as 20 to 25 percent, depending on different folks in the industry. So, somewhere between 12 percent and 25 percent is everybody's best guess as what these cow numbers might be by the first of the year. Regardless, if it is 13 percent or 25 percent, even 13 percent is a really big drop in the state of Texas."
One of the biggest questions on everybody's mind is 'what will replacement cattle bring once the drought is over, or in two years when the tax provisions say cattleman will have to buy back their herds?'
"We have already seen a little bit with some recent moisture, there has been some sales where those replacement cows have brought some really good money" he added. "So, as that demand continues for replacement females, we can expect higher prices."
At the same time ,there are a couple other forces pushing prices upward.
"Our calf prices are extremely high, so either as feeder heifers or replacement heifers, they are expensive," Cleere said. "As the calf prices are driven up, it is also driving up our replacement female prices. Another thing is that at the same time, when there is a lower supply of calves out there going to the feedyards, there is also going to be a lower supply of cows to be shipped to market for packer cows."
As the market moves forward, concerns of even lower supplies are driving the market, and causing market and breeding stock buyers to compete for the same cattle. The next few years are likely to continue to see higher prices, as producers buy back their herds and market buyers attempt to meet their quotas.
