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41 % 40 % 39 % 38 % 37 % 36 % 35 % 34 % 33 % 32 % 31 %
U . S . Heifer Slaughter % of Fed Slaughter
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 Years
Source : USDA CattleFax Projections
The number of heifers in feedyards and the slaughter mix are down slightly from year-ago levels ( Image 4 ). Following cow slaughter trends , heifer slaughter as a percent of fed slaughter is projected to hit 38.8 % for 2023 . Historically , a heifer slaughter rate of 36 % or higher indicates cow herd liquidation while rates below 36 % indicate expansion .
Moreover , the number of heifers moving in the country through auctions and video sales in 2023 is down slightly from 2022 levels , but still remains above the 10-year average . Heifer sales receipts , after dropping earlier this summer , shot up again in late July and August ( Image 5 ). This coincides with the worsening moisture conditions in the Central and South Plains as producers likely intended to keep more replacements this year but were then forced to sell more heifers to preserve feed resources in face of continued drought .
Weather conditions remain a challenge . Though the La Niña weather pattern that dominated from 2020 to 2022 has moved on , dry conditions still exist in many areas as we transition into an El Niño pattern . The recent U . S . Drought Monitor update showed nearly 46 % of the beef cow herd was located in drought-affected states in July , down from 49 % a year ago ( Image 6 ). The big change from a year ago is that no states are considered to be in extreme or exceptional drought statewide , though some pockets of extreme drought are still present in Texas , Kansas and Nebraska .
The persistent dry conditions have kept roughage supplies tight , adding to producers ’ cost of production . Overall , input costs remain high , particularly in the categories of land , feed , fuel and labor . This inflation , combined with higher interest rates , can serve to slow the rate of expansion . Furthermore , the slow but steady urban sprawl , coupled with increasing producer age , serve as additional headwinds . That said , price levels are now high enough to outstrip input costs and incentivize expansion . All these factors suggest cow herd liquidation is slowing down with certain regions having the opportunity to retain heifer calves this fall with the goal of breeding them for replacements next year . Cow-calf producers in the West , Mountain West and North Plains regions are the most likely to enter an expansion pattern this fall based on current weather patterns and market conditions .
Reduced cattle inventory numbers will continue to drive prices higher for all classes of cattle for the next several years . With the surge in prices so far this year , total industry profitability is projected to be the second largest on record in 2023 , driven by strong demand for the quality , safety and consistency of U . S . beef . In the years ahead , higher prices will drive cyclically strong margins for the cow-calf producer , a much-needed improvement to drive expansion in this sector as weather patterns allow .
Percent
Moderate or Worse Drought
50 % 48 % 46 % 44 % 42 % 40 % 38 % 36 % 34 % 32 %
Heifers as % of U . S . Feeder & Calf Sales
80 % Range 10-Yr . Average 2022 2023
2023 YTD Avg : 42.1 % 2022 YTD Avg : 42.8 % 10-Yr Avg : 39.8 %
30 % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source : USDA , CattleFax
Month
60 % 55 % 50 % 45 % 40 % 35 % 30 % 25 % 20 % 15 % 10 % 5 %
Percent of U . S . Beef Cowherd in Drought
80 % Range 40-Yr Avg 2020 2021 2022 2023
0 % Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Source : USDA , NOAA , CattleFax
Months
26 NATIONAL CATTLEMEN DIRECTIONS 2023