Ongoing reductions in the ratio of heifers on feed to steers suggests herd expansion is continuing at an aggressive rate, says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments.

“The ratio of steers to heifers in feedlots since April of this year has reached levels not seen since the cyclical expansion in the early 1990s. The quarterly data on the breakdown of feedlot inventory only goes back to 1994,” says Peel. “Similar indications are shown by the ratio of steer to heifer slaughter, for which the data goes back much further. A 12- month moving average of the ratio of steer-to-heifer monthly slaughter for September is at the highest level since June, 1975.  The current ratio of steer to heifer slaughter exceeds levels that occurred in the cyclical expansion of the early 1990s as well as the truncated expansion in 2004-2005.”

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For further perspective, Peel explains the number of heifers on feed Oct. 1 were 7% fewer than a year earlier—the 13th consecutive quarter of year-to-year decreases going back to July 2012.

“This confirms not only that the industry is in the midst of herd expansion, but that it is a very aggressive herd expansion,” Peel says. “It is not clear how long this aggressive herd expansion will persist, or whether the recent market shakeup may have tempered expansion plans. How much herd expansion will occur and how fast it will happen are both moving targets that will be determined by both demand and supply factors in the coming months/years.”

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