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207: Herd Inventory Decline: What It Means & What You Can Do Now · CattleUSA Daily

• 0:03
  Welcome to the Cattle USA Daily podcast.
• 0:06
  Your go to source for. The latest livestock markets,
• 0:08
  industry insights and the update shaping agriculture today.
• 0:12
  I'm your host, Lauren Moylan, a passionate advocate for
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  agriculture here. To keep.
• 0:16
  You informed and connected, now let's dive into today's episode.
• 0:27
  The US cow herd keeps shrinking, and every time new numbers come
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  out, the headline is the same. Lowest inventory in decades.
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  But what does that actually mean for you as a producer?
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  For prices? For risk and for the decisions
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  that you make this season. Today we are breaking down the
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  herd inventory decline in plain terms, why it's happening and
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  what it does to the market and what smart ranchers should be
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  doing right now before things tighten even further.
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  Now, let's get one thing straight.
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  The herd didn't shrink for just one reason.
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  It was a stack of factors. Over several years.
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  Drought pushed producers to liquidate cows early.
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  High feed costs and low forage supplies made it impossible to
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  hold on to marginal cows. Interest rates climbed, which
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  made carrying costs more expensive, and the industry was
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  still cycling down after several years of big heifer coals and
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  high beef demand. None of this reverses quickly.
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  You don't rebuild a national cow herd in a single year.
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  You rebuild it calf by calf, pasture by pasture, operation by
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  operation. A smaller herd means one thing.
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  Fewer calves and tighter supplies and tight supply
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  supports higher prices for calves, feeders and fats.
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  We've already seen that on the board and at the sale barn.
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  Strong grass cattle, high quality feeders bringing big
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  premiums, and bred females priced like gold.
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  But supply shortages don't just push calf prices up, they also
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  put pressure on Packers, increase competition for
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  inventory, and shift leverage slightly back towards the
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  producers on the front end. When the herd shrinks, the
• 2:20
  people with the cattle have the power.
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  But, and this is the part most people skip, power only matters
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  if you manage cost and risk at the same time.
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  OK, so herd numbers are low. I'm not the first person to say
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  it. You guys have been hearing it
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  for a long time. What does that look like for a
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  rancher actually running cows? It means your calves are likely
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  going to be worth more over the next couple of years if you keep
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  cows bred and in good condition. It means retaining ownership
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  becomes more attractive because each pound is worth more.
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  It means bred heifers and quality young cattle will stay
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  expensive, which can make rebuilding painful if you sold
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  deep the last two years. And it means you can't afford to
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  have a sloppy nutrition program or a sloppy reproduction
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  program. One open cow in a high-priced
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  environment is more expensive than one open cow in a low price
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  environment. Here's the trap a lot of
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  ranchers fall into during high price cycles.
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  They assume high prices equals high profit.
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  But rebuilding A herd when everyone else is trying to
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  rebuild and with high interest rates can steal your profit just
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  as fast. If replacements cost 2500 to
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  $3500 per head and interest rates are at 8 to 9% and feed is
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  still expensive, you could easily be buying a high value
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  animal that doesn't cash flow for two years.
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  So yes, the herd decline sets us up for a profitable face, but
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  only for operations that stay disciplined.
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  High input costs can erase the advantage if you're not careful.
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  So what should you be doing right now?
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  You need to protect every bread cow you can justify, because
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  every live, healthy cow in a low inventory environment is an
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  asset. But don't keep freeloaders.
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  If she's open or late, she's costing you more than she's
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  worth. You need to double down on
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  nutrition this fall and winter. Your biggest profit risk this
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  year is a cow that slips out of the breeding window.
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  You need to maintain body condition, score, test hay and
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  fix mineral gaps. You need to get aggressive about
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  reproduction discipline, shorter breeding seasons, earlier preg
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  checks, cull early and cell opens before feed becomes a
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  sunken cost #4 you need to know your cost per cow.
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  Low inventory doesn't save an operation with runaway feed
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  costs #5 you need to make a plan for your replacements before
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  spring sticker shock hits. If you're rebuilding, do it
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  intentionally. Buy quality genetics, Don't
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  rush. Consider home raised
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  replacements if inputs allow and don't buy the most expensive
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  heifer just because she's standing there.
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  Number six, watch interest rates like you watch rainfall.
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  Financing cows in a high rate environment changes the math.
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  Cash flow matters right now more than ever.
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  And #7 don't assume high prices are here forever.
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  Every cattle cycle has a peak. Your job is to make money on the
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  way up, not assume that the mountain stays tall.
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  So here's the reality. A shrinking US herd means
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  opportunity, but not automatic profit.
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  It rewards operations that are efficient, disciplined and
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  paying attention. If you can protect cow
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  condition, protect reproduction, manage feed cost, and stay
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  patient with your rebuilding strategy, you're set up to win.
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  In this phase of the cattle cycle, the herd may be
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  shrinking, but margin isn't. Not if you manage it.
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  This is the Cali USA daily podcast.
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  I'm your host, Lauren Moylan. Thanks for tuning in to another
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  episode. I'll catch you all next time.