A Brief History of Cattle Cycles

Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist

The cattle cycle is perhaps the most iconic characteristic of the U.S. cattle industry.  Cattle cycles emerged as the ranching industry developed in the late 1800s. Cattle inventory data shows that the number of cattle in the U.S. was 28.6 million head in 1867, just after the Civil War.  Cattle numbers expanded continuously to 60 million head by 1890, the first cyclical peak.  Cattle numbers liquidated to 49.2 million head by 1896 before expanding again.  The was the first of continuous cattle cycles, which have continued since.  Cattle cycles can be measured from peak to peak or trough to trough. There have been a total of 12 cyclical peaks and 11 cyclical troughs since the first peak in 1890.  Often described as a “ten-year cycle”, the time between peaks and between troughs has averaged 12.8 years.

Cycles have been a feature of the cattle industry regardless of whether the industry is trending larger or smaller.  Cattle inventories trended higher from 28.6 million head in 1867 to 132.0 million head in 1975, an increase of 361% over 108 years.  Cattle inventories have trended generally lower since 1975.  The 2021 inventory of 93.6 million head is down 29.1 percent from the peak in 1975 but is 226.8 percent higher than the 1867 level.

Cattle cycles reflect a variety of drivers that affect the cow-calf sector, the primary supply source for the industry.  Most important among these drivers are changes in calf prices that determine cow-calf sector revenues, but input price changes that likewise impact returns can also drive cattle cycles.  Periodic droughts can provoke or prolong cyclical liquidation and have multi-year impacts on cattle industry trajectory.

Cattle cycles continue to be a regular feature of the industry for several reasons.  It takes rather exaggerated price signals to encourage the cow-calf sector to change course and the lengthy biology of cattle production makes changing course a slow process.  Perhaps most important is the interaction between production and reproduction in the cattle industry.  Since cattle have offspring one a time, the process of expanding production when inventories are too low means that tight supplies are made even tighter to retain heifers for increased production and likewise too much supply is made even larger in the short run as more cows are culled and fewer heifers are retained for production.

The latest cyclical expansion from 2014 – 2019 was the first significant cyclical expansion since the period from 1990-1996.  A muted cycle from 2004-2007 resulted in very little expansion before more liquidation to 2014.  Cattle inventories declined 15 of 18 years from 1996 to 2014.  The most recent cattle cycle began with an inventory low of 88.24 million head in 2014 with cattle numbers increasing to 94.8 million head in 2019.  Modest cyclical liquidation in 2019 and 2020 brought cattle inventories down to 93.6 million head in January 2021.  Herd liquidation is being exaggerated by drought in 2021.  It is not clear exactly how much and how fast the industry will liquidate going forward but cattle cycles continue to be an important fundamental feature affecting cattle markets in the U.S.

Management Practices for Cows at Weaning: Part 2 – Analyzing Cow Production Performance

Mark Z. Johnson, Oklahoma State University Extension Beef Cattle Breeding Specialist

Regular and consistent performance analysis can help a cow-calf operation: 1) identify where the business has excelled as well as opportunities for improvement. 2) make informed management decisions, and 3) formulate goals and monitor progress toward goals.   Analyzing cow herd performance for only one year will not accomplish all the above.  Regular analysis over time helps producers build a base of knowledge for better management decisions and improved profitability.  Several years of analysis of the information collected on the cow herd (covered last week) in addition to accurate cattle inventory records throughout the year, helps producers monitor improvement in financial and production statistics to verify progress made and get a true picture of the ranch’s performance and potential.

Beef Production and Reproductive Measures

Accurate production records are essential for meaningful analysis.  In addition to the cow herd information we discussed last week, inventories of all categories of cattle are necessary at times of breeding, pregnancy testing, calving and weaning.  What follows are some basic calculations of beef herd performance measures which should be evaluated after weaning.

Pregnancy Percentage = (Number of females Pregnant/Number of females Exposed) x 100

Calving Percentage = (Number of calves Born/Number of Females Exposed) x 100

Keep in Mind:  Low values in both the above calculations indicate a problem but not the cause of the problem.  Environmental stresses will cause year to year variation.

Calf Death Loss per Exposed Female = (Number of calves that died/Number of Exposed females) x 100

Calf Death Loss per Calves Born = (Number of Calves that Died/Number of calves Born) x 100

Percent Calf Crop Weaned = (Number of Calves Weaned/Number of Females Exposed) x 100

Keep in Mind: Percent Calf Crop Weaned is a good indicator of total herd productivity, nutritional adequacy and good husbandry practices because it takes into account the previous calculations; however, it does not account for excessive use of inputs like feed and labor.

Calving Distribution.  Monitoring calving distribution within the calving season can provide insight on the reproductive performance of the herd.  Typically done by splitting the calving season into thirds.  For example, in a 75 day calving season, track how many cows calve in days 1 – 25, 26 – 50 and 51 – 75.  Ideally, a large proportion of the cowherd would calve in the first third of the calving season.  This would indicate good management,  nutritional adequacy and good reproductive performance.

Actual Weaning Weights.  Often used as a performance benchmark.  Higher profit operations tend to have heavier weaning weights; however, the methods used to accomplish need to be evaluated closely relative to cost effectiveness.

Lbs. Weaned per Exposed Female = (Total Lbs. of Calves Weaned/Total Number of Exposed Females) x 100

One of the key production records each cow-calf operation should assess for each calf crop.  A meaningful record because it takes into account herd reproductive rate, calf death loss and genetic potential for growth and maternal performance.  Age at weaning and calving distribution has profound impact on pounds weaned for exposed female making this performance measure meaningful for the individual operation to evaluate on a year to year basis.

More information can be found on the calculation and meaning these measures of herd performance in the 8^th edition of the OSU Beef Manual referenced below.  None of these measures is a stand-alone indicator.  They should be viewed collectively and in relationship to each other.  Over time, they can indicate areas in which management can be improved in the form of breeding decisions, herd health, or nutrition and stocking rates.

References

Beef Cattle Manual. Eight Edition. E-913. Oklahoma Cooperative Extension. Chapter 4.

Making Money in the Cattle Business: Part 1 - Buy Low and Sell High

Paul Beck, Oklahoma State University Extension Beef Nutrition Specialist

When I was a kid, my Great Uncle Ed Frank would come visit us from Arkansas. Years before he had sold his ranching operation in western Oklahoma and bought a farm in the Arkansas Delta. His business model was ultimately based on grazing Mississippi Levee land for $1/mile for the season with calves bought cheap from sale barns in Louisiana, Mississippi, and Arkansas before shipping them to feedyards in the Texas Panhandle. As an impressionable youth, I asked him “How do you make money in the cattle business?” and his answer blew me away with its wisdom and simplicity.

He said, “Buy low, sell high, keep ‘em alive, and put gain on ‘em cheap”.

As cliché as it sounds, it really impressed me at the time and I have spent most of the last 35 years studying these topics. For the next few weeks, I am going to write about each one of these to explore the truth behind this wisdom, this week I will cover “Buy low, sell high”.

This is possible for both cow-calf and stocker producers.

For cow-calf producers, we can do this when we expand our operation when the rest of the industry is in the contraction phase of the cattle cycle. When the cattle cycle is in contraction, others are selling cows because they cowherd has been built up to such an extent that calf prices are at cyclical lows. Expansion of your cowherd, happens when everyone else is selling, at a cheaper price. Usually within a few years, calves from the expanded cowherd are sold when there are low cattle numbers and at a higher price.

Can you really pull this off in the stocker business? Or will cheap calves always be cheaper?

The Noble Foundation graded 395 cattle before turnout and coming off winter pasture, and then followed them through finishing and slaughter. The 110 steers that were graded as Small Frame, were purchased at a $13 per hundred weight discount. When calves were graded after grazing only 58 were still considered Small Frame. Calves purchased as Small Frame, were valued only $1/cwt less than Medium Frame steers at the end of grazing and were $27/head more profitable. These calves were all of English (Angus or Hereford) or Continental (Charolais, Simmental, etc.) breeds with little to no Brahman, dairy, or Longhorn breeding.

The classic example of buying cheap and selling high occurs when the cow-calf producer sells an un-weaned, horned, bull calf. These calves can often be found at discounts up to $25/cwt. There are reasons why these calves are discounted as much as they are. We will cover this topic next week when we explore “keep ‘em alive”.

Klemme Range Research Station Field Day Covers OSU Research in Western Oklahoma

Paul Beck, Oklahoma State University Extension Beef Nutrition Specialist

The Klemme Range Research Station Field Day is scheduled for September 29, 2021 from 8:30 am to noon with lunch provided. This field day is sponsored by MasterHand Milling so there is no charge to attend. From I-40 take Exit 66 on Highway 183 toward Cordell, go 6 miles south and turn west on County Road E1120 for 4 miles, turn north on County Road N2200 for 1.7 miles to get to the Station Headquarters. Contact Marty New (405-880-3188), Paul Beck (405-744-9288) or Zack Henderson (580-832-3356) for detail and to RSVP. We look forward to seeing you there!