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Market Advisor: Dry Weather Stalls Cattle Herd Buildup

All cattle and calves in the U.S. on Jan. 1 totaled 96.7 million head, slightly below the 97 million on Jan. 1, 2007.

By Tim Petry, Livestock Marketing Economist

NDSU Extension Service

The USDA’s National Agricultural Statistics Service (NASS) Jan. 1 cattle report released on Feb. 2 indicates that cattle herd buildup has been stalled by dry weather conditions in the southeastern and southwestern regions of the U.S.

All cattle and calves in the U.S. on Jan. 1 totaled 96.7 million head, slightly below the 97 million on Jan. 1, 2007. Three years of herd expansion had occurred since the cyclical low in 2004.

Beef cows and heifers that have calved declined 1 percent. Extremely dry conditions through much of 2007 in several southeastern states led to the decline. Beef-cow numbers in Alabama, Florida, Georgia, Kentucky, North Carolina, South Carolina and Tennessee declined 6 percent, 1 percent, 5 percent, 4 percent, 5 percent, 3 percent and 6 percent, respectively.

Dry conditions in the southwest also contributed to the decline in beef cows, with Arizona, California and Nevada all down 6 percent from the previous year.

In 2006, extremely dry conditions in both the southern and northern Plains caused herd liquidations. However, much of that area returned to more normal rainfall in 2007. Oklahoma led the southern Plains with a 3 percent increase in beef cows on Jan. l. A nice rebound in moisture conditions in parts of the northern Plains during 2007 was instrumental in a 10 percent increase in beef cows in Montana.

Interestingly, although most of North Dakota was very dry in 2006, beef cow numbers increased by 2,000 head after very strong feeder cattle prices in 2005. However, during 2007, when more normal precipitation occurred, beef cow numbers declined 17,000 head, according to NASS.

Beef-cow slaughter increased more than 6 percent in 2007 and was at the highest level in several years.

Heifers kept for beef-cow replacements declined about 3.5 percent, from 5.87 million head on Jan. 1, 2007, to 5.67 million in 2008. Of those, about 3.42 million are expected to calve in 2008. In general, the same states that saw beef-cow numbers decline also experienced a decline in beef replacement heifers.

U.S. milk cow numbers increased 1 percent from 9.13 million head in 2007 to 9.22 million in 2008. Heifers kept for milk-cow replacements also increased more than 3 percent.

Expansion in the dairy cattle industry was due to higher milk prices in 2007. Prices were fueled by declining production in several important milk-producing countries and strong world demand for milk products.

The southwestern and western states, which have seen increasing milk cow herds for several years, continued that trend. Herds increased in Arizona, California, Colorado, Idaho, Texas and Washington. Milk cow numbers also increased in the Corn Belt states of Iowa, Michigan, Minnesota, South Dakota and Wisconsin.

The number of cattle on feed to slaughter weight increased slightly, from 14.27 million head in 2007 to 14.32 million in 2008. This occurred in spite of a slightly smaller calf crop at 37.3 million head in 2007, compared with 37.52 million in 2006. One reason for more cattle on feed was due to the 33 percent fewer cattle on winter wheat pastures in the southern Plains than last year. Historically high wheat prices and adverse planting and growing weather conditions caused the decline.

Furthermore, more Canadian feeder cattle entered the U.S. in the fall of 2007 than in the previous year. That was due to very high feed barley prices in Canada.

The combined total of calves less than 500 pounds and other steers and heifers more than 500 pounds that were outside of feedlots was 28.2 million head, which is down slightly from a year earlier. So, feeder cattle supplies available to feedlots will remain near the levels of the last two years, which were 28.3 million head in 2007 and 28.2 million in 2006.

Available supplies will depend on how many heifers ultimately are retained for breeding. Heifer retention will be influenced by weather conditions in 2008 and how cow-calf producers respond to both lower feeder cattle prices due to sharply higher corn prices and increasing production costs.

With feeder cattle numbers near last year’s levels, corn prices remain the wild card in 2008 feeder cattle prices. Corn prices in the northern Plains averaged about $1.20 per bushel higher in 2007 than 2006 and are about $1 per bushel higher than last year.


NDSU Agriculture Communication

Source:Tim Petry, (701) 231-7469, tim.petry@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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