Cattle Inventory Expected to Show Decline in Beef Cows
Posted by Unknown in Beef, Cattle and Livestock, Meat, Meat Animal, USA, USDA on Tuesday 29 January 2013
USDA
will release on Friday, January 27 the results of its semi-annual
survey of US cattle operations, offering an estimate of the number of
cattle and calves in the US as of January 1, 2012. The table below
presents the inventory survey numbers for the previous three years as
well as analysts estimates ahead of the USDA report.
The
report is expected to show further reductions in the size of the US
cattle herd, with particularly sharp declines in the number of beef cows
and further contraction in the number of heifers held back for beef cow
herd rebuilding. Analysts on average expect the survey to show a 1.6%
decline in the size of the cattle herd. This implies a total inventory
of 91.1 million head, the smallest since at least 1958 when the total
cattle inventory was pegged at 91.176 million head. To be sure, beef
production today is significantly larger than it was back in the 1950s,
thanks to tremendous productivity gains. In 1958, US commercial beef
production was pegged at 12.983 billion pounds, compared to 26.297
billion pounds in 2011. In addition to producing heavier animals, the
feedlot system has allowed producers to significantly accelerate the
time it takes calves to come to market. Consider that in 1958, US cattle
slaughter was 23.555 million head while in 2011, overall slaughter is
estimated at 34.2 million head. The average carcass weight of cattle
that went to slaughter in 1958 was 575 pounds, compared to 773 pounds in
2011. So while the headlines after the inventory report will likely
focus on the fact that cattle numbers are the lowest in some 50 years,
keep in mind that cattle slaughter in 2011 was about 46% bigger than it
was in 1958 and carcass weights were 34% larger than they were then.
Today, we produce more than double the amount of beef from the same size
herd (indeed the beef cow herd is smaller today that it was then).
The
concern going forward is that much of the productivity growth in the
future will be incremental. The low hanging fruit has already been taken
and the industry is now running against biological barriers. It will be
difficult to further increase beef production without increasing the
size of the cattle herd. While there are plenty of signals for expansion
in 2012 and 2013, the January survey will likely show that producers
continued to liquidate the herd in 2011, largely due to escalating feed
costs and limited pastures. The beef cow inventory on January 1, 2012 is
expected to be down 2.5% while the number of heifers held back for beef
cow herd replacement is expected to be down 2.1%. One thing to watch
for in the upcoming report is how the distribution of the US cattle
numbers changed in 2011. Drought stricken states, such as Texas and
Oklahoma, likely saw a sharp decline in their beef cow herd, while other
states probably saw notable gains from a year ago. The expectation is
for producers to increase heifer retention in 2012 as calf prices hit
record highs. In some areas, however, that may be limited by long term
drought conditions and limited feed supplies. The overall expectation is
for smaller beef supplies in 2012 and 2013, the inventory survey should
tell us how big the decline will likely be.
