The U.S. cattle herd has fallen yet again to its lowest level in over 70 years. The industry has spent the last several years desperately awaiting a rebound.
Mexico played a key role during this time, supplying cattle across the southern border to keep the U.S. processing industry afloat. That was until the New World Screwworm was detected in the country, leading to a complete livestock border shutdown.
Since then, the USDA has been adamant about working with partners in Mexico to reopen the border and has even suggested its imports could resume in the coming days. However, that is yet to happen.
“We’ve been hearing that for the last three weeks, I think, or the last month... The borders are going to open in a week,” explained Brady Miller, of the Texas Cattle Feeders Association. “Borders are going to open in a week, and we have yet to see that. You know, we’re getting closer every day in getting that done. The pens in Mexico where they have to be, cattle have to be held and inspected before they come across. Many of those have passed their test as far as meeting their requirements when it comes to the New World screwworm. But today, we’re waiting on some paperwork to be signed and filed. So when we’re talking about the Mexican government and the U.S. government, I mean, that’s kind of what’s holding this thing up, and that’s what we’re waiting on.”
Miller says the closed border prolonged the time it takes to rebuild the U.S. herd. Reflecting on cattle cycles and rebuilds of the past, he says that this cycle looks a bit different.
“What I can say here and tell you based off what we’ve learned in the last round of the 11 and 12, which acted differently,” Miller adds. “I mean, that was a super fast down, and it was super fast up. They call it a ‘V’ bottom. This one is more what they call a ‘saucer bottom’ because it’s been prolonged, and I think one of the reasons why this has been prolonged, looking at what we’re looking at today and looking forward, is because of the high prices that these animals are bringing. So, one of the things that we watch very heavily to tell us if we’re in the rebuilding phase or not is how many heifers we have on feed. And so, from the time we start seeing the heifers on feed drop significantly. What I can tell you is it takes about— well, what it took last time was about 10 months to two years before we actually bottomed out, and we saw the high prices before we started building the other direction, back in 2015-2016.”
Miller says that a typical cattle-on-feed split for his three-state area is 41% heifers and 59% steers. While they still have not quite reached those numbers, things are moving in the right direction.
“What I can tell you for the last two or three months is that we have been running in the low 30s,” he says. “We’ve been running around 33% heifers on feed. Now, am I going to sit here and tell you that that means that we’re in a deep rebuilding phase? I don’t think I’m comfortable enough to sit here and tell you that, but we’re getting close. And its been a couple months here that we’ve been running in that low 30 range that I’m getting pretty comfortable to say, ‘Okay, now we’re getting to the point, in the south at least, that I feel like we’re probably more in a rebuilding phase now than what I could have sat here and told you two months ago.’”
Miller says that today’s cattle market has the potential to change quickly. With such high prices, ranchers face some challenging decisions.
