For years, high feed costs and low milk cow values discouraged dairy producers from raising heifers. In 2019, the average price of springing heifers dropped to $1,140 per head, according to USDA’s Agricultural Prices report. Adjusted for inflation, that was the lowest value ever recorded. Prices bounced back in the past three years but remained well below the cost to raise heifers to maturity. Over the same period, the beef cattle herd shrunk, and the beef industry paid handsome prices for dairy-beef crossbred calves. Thus, dairy producers could raise dairy heifers at great expense, or use beef sires and sell the calves to livestock feeders at a profit, while purchasing dairy heifers as needed. Many chose to raise fewer dairy heifers and bred lower-end milk cows to beef sires.
The shift to crossbred calves diminished U.S. dairy heifer supplies. USDA’s annual Cattle report released yesterday showed 2.77 million dairy heifers expected to calve and enter the milking herd this year. That is 2% fewer than 2022 and the smallest heifer inventory since 2004. The report also showed fewer than 29 million beef cows as of January 1, the lowest number since 1963. Most importantly, there were fewer beef heifers and cows to rebuild the herd. The numbers signaled that the beef industry will likely pay higher prices for dairybeef crossbred calves in coming months. Meanwhile, the scarcity of dairy heifers suggests springer prices will rise, adding to the cost of stocking new facilities, and deterring growth in U.S. milk supplies.
February 1, 2023