Drought Continues to Play Significant Role in Cattle Cycle

Drought is playing a significant role in the cattle cycle. Two years of drought have deteriorated pasture and forage conditions, and the pastureland condition index for 2022 is off to its worst start for the grazing season since the series began in 1995 

This is pushing calves into feedlots at a faster pace, which will likely quicken the pace of fed cattle slaughter in 2022, leaving fewer supplies of cattle available for slaughter in late 2022 and 2023.

Furthermore, drought conditions and higher operating costs have encouraged the rapid culling of beef cows in first-quarter 2022 to levels not seen in decades. Also, based on the USDA Agricultural Marketing Service reports for actual weekly slaughter under federal inspection, April 2022 showed the highest number of beef cows slaughtered for the month since 1996; there were over 5 million more beef cows on Jan. 1, 1996, than Jan. 1 of this year. Subsequently, the outlook weakens for potential calf crops in 2022 and 2023, further reducing potential cattle placements year over year in late 2022 and early 2023.