A Contracting Cattle Herd: How drought is impacting prices and genetics

The U.S. beef cow herd reached its lowest level in decades this summer due to prolonged drought. The contracting herd has led to higher dairy bull calf prices and could compel more dairy producers to leverage beef breed genetics in their reproduction programs.

CoBank Animal Protein Economist, Brian Earnest, joined us on the Market Day Report for a further perspective on where things stand with the U.S. beef herd and if dairy on beef will bolster supplies.

One CoBank Economist is calling raising beef calves from dairy cows a mega trend! He says it has become the second highest revenue stream for many dairy producers. In 2016, it was estimated there were 200,000 of the cross calves. Now CattleFax believes there is more than two million calves born just this year.

Analysts say the cross calves have a better feed efficiency and bring more profit at harvest, some bringing two to three hundred dollars more than a purebred dairy cow.

U.S. cattle prices are moving in the opposite direction from other parts of the world. That declining cattle herd coupled with strong consumer demand are driving up prices in the U.S. market. Whereas, demand has not recovered in most other global markets. The U.S. is up 30% in cattle prices, while Australia is down 30%. This marks the largest split seen in the last decade. Rabobank analysts fear it could impact competition among beef exporters.

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