Since 2007, the calculated number of heifers entering the cow herd has remained above average, even while the high rate of cow culling has resulted in net liquidation and reduction in the cow herd inventory.
"In a more typical cattle cycle, the rate of heifer placement decreases at the same time as increased cow culling, with both contributing to herd liquidation," Peel said.
This very thing happened during the 1996-2001 period of cattle inventory liquidation, as an example. In contrast, heifer placement typically increases simultaneously with decreased cow culling during herd expansion, as was the case from 1991-1995.
"In recent years, producers have continued to invest in replacement heifers despite the necessity of reducing herd size because of external factors," Peel said. "That the industry has simultaneously increased cow culling and heifer placements in recent years means the beef cow herd is not only the smallest in 60 years but likely one of the youngest and most productive ever."
Cow-calf producers appear to have a growing incentive for herd expansion given strong profit prospects and improved forage conditions in many regions of the United States. Beef cow slaughter for the year to date decreased 13% in the most recent two weeks of data available.
"This suggests the beef industry may be back on track of decreasing cow slaughter, a necessary component of herd expansion," Peel said. "However, sharply decreased beef slaughter of 8% to 12% for the remainder of the year will result in an annual beef cow slaughter decline in the modest 4% to 5% range."
Additionally, there are indications replacement heifers were diverted into feeder markets during the first half of 2013, attributed to the residual effects of drought, reduced hay supplies and extended winter weather across areas of the United States.
Peel said the combination of larger cow slaughter – resulting in smaller than projected reductions – and decreased heifer placements is likely to result in a year-over-year decrease of 0.75% to 1.25% in the beef cow herd as of Jan. 1, 2014.