U.S. and Canadian producers still not retaining heifers, which is a key signal for determining where herd size is headed
SWIFT CURRENT, Sask. — The Canadian and American cow herds continue to shrink while demand is met by heavier finished weights, said market analyst Anne Wasko.
She said producers will watch for signals to retain heifers, but those aren’t in place yet, even with better moisture conditions.
The U.S. cow herd as of Jan. 1 was down 2.5 per cent to 28.2 million head and industry watchers there believe heifer retention isn’t likely until 2025 or 2026.
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“That would be the next key signal for us,” she told the Saskatchewan Stock Growers Association convention.
U.S. replacement heifers have dropped by 25 per cent since the peak of the cycle in 2017. It normally takes four to five years to build back but this is a more extended cycle, she said.
“It’s taken us a lot longer to liquidate and it’s probably going to take more time to grow.”
There are still elevated numbers of heifers on feed in the United States.
The Canadian cow herd has been steadily declining for years and is down a further two percent this year at 3.46 million.
Replacement numbers are the smallest in western Canada since 2012 and heifers-on-feed numbers in the region are the largest since 2011.
Wasko said it might be time to get past the focus on herd size because demand is being met by increasingly heavier finished weights.
“We’ve shown that even with where our production peaked in 2022, with a much smaller herd, and in the U.S. it was record tonnage in 2022 with a much smaller herd than they had in previous cycles, that you don’t need the same size of cow herd as we used to have,” she said.
Carcass weights have risen significantly.
“This year, we could be 20 to 25 pounds heavier on each steer that we produce on a carcass weight basis than last year, which is a big one-year jump,” she said.
Wasko said she doesn’t expect herd size to return to where it used to be.
Reasons include the factors on the supply side but also land conversion, demographics, input costs, interest rates, land prices and more.
“The list is long as to why this cycle is probably different in terms of being longer and likely never going back to where we came from,” she said.
Still, rain across the Prairies where most of the Canadian herd resides means this year is likely more normal than the last few.
Producers may not sell as many feeders this summer and go back to placing them in the fall, while calves might stay on the cows until normal fall weaning, Wasko said.
“It feels like the last several years has been far from normal but it does impact production,” she said. “Droughts mean more cattle on feed. These kinds of good moisture conditions and feed supplies potentially mean cattle can stay out on pasture longer.”
The North American feeder market is tight and expected to remain competitive throughout the year.
Wasko also said meteorologists are suggesting the El Nino that replaced the La Nina pattern of several years is already trending into neutral and that means another La Nina is on its way.
She said drought is never off the table as these systems change.
Another thing to watch through 2024 is corn. Production is forecast to be 14.8 billion bushels, with a practical price range of $4.50 to $5 U.S. per bushel and a stocks-to-use ratio of about 14 percent, she said.
Lower cost of gain supports feeder cattle and calf prices.
The situation is similar for western Canadian barley, with a positive stocks-to-use ratio.
