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Market Advisor: Beef Cow Herd Continues to Shrink

The reduction in the U.S. beef cow herd and lower numbers of cattle on feed should result in lower cattle slaughter and declining beef production.

By Tim Petry, Livestock Marketing Economist

NDSU Extension Service

The U.S. Department of Agriculture’s National Agricultural Statistics Service (NASS) Jan. 1 cattle inventory report released on Jan. 29 indicated a continuing decline in the U.S. cattle herd. Most people in the cattle and beef industry were expecting cattle numbers to be lower, with some expecting even lower numbers than what NASS reported.

All cattle and calves in the U.S. on Jan. 1 totaled 93.7 million head. This is 0.9 percent below the 94.5 million recorded on Jan. 1, 2009. At 31.4 million head, beef cows were down 1.1 percent from last year.

Beef cow numbers were relatively stable in 2005, 2006 and 2007 at approximately 32.9 million head, but declined to 32.4 million in 2008, 31.7 million in 2009 and 31.4 million in 2010. The decline recorded on Jan. 1, 2008, was likely due in large part to drought in many important cattle- producing regions in the U.S. The 2009 number was impacted by high feed grain, fuel and fertilizer prices, which caused increased production costs. The 2010 decline was affected by lower cattle prices due to the weak U.S. and world economies and struggling beef demand issues.

Beef heifers more than 500 pounds kept for replacement in the U.S. also were down about 1.7 percent, so the beef cow herd likely will not increase this year as well. With corn prices moderating somewhat, good moisture conditions in many cattle-producing regions and the chance for higher cattle prices when the economy improves, there may be interest in retaining more beef heifers in 2010. Replacement-quality heifers are commanding premium prices at many northern Plains cattle auction markets.

The total number of cattle on feed declined about 1.5 percent and steers more than 500 pounds not in feedlots in the U.S. declined 2 percent. So, excess capacity in the feedlot sector likely will continue and should help support feeder cattle prices this year.

Total cattle, beef cow and replacement heifer numbers in North Dakota followed the national downward trend. Beef cow numbers were reported by NASS to be down about 3 percent in the state.

However, steers and heifers more than 500 pounds and cattle on feed in North Dakota bucked the national trend with significant increases from last year. More-than-500-pound steer numbers were up almost 6 percent and cattle on feed were reported to have increased by almost 29 percent.

A major reason for the increased number of calves in North Dakota on Jan. 1 was the reduced sales volume that occurred throughout the fall marketing season. Mild weather and good forage conditions resulted in many calves being weaned a month later than last year, when winter set in early and drought in the western part of the state limited forage availability. Cattle operations that graze cows on corn stalks after weaning the calves had to wait to wean because the corn harvest was very late. By January, only 73 percent of the corn had been harvested in North Dakota.

Ample forage supplies, a large feed barley crop, lots of high-moisture corn and low calf prices encouraged calf backgrounding and cattle feeding.

The reduction in the U.S. beef cow herd and lower numbers of cattle on feed should result in lower cattle slaughter and declining beef production. Beef production could decline by 2 percent in 2010 and another 1 percent in 2011, which should be supportive to beef and cattle prices in the longer run.

Feeder cattle prices already have shown nice strength in 2010. However, weak domestic and world economies and struggling beef demand right now continue to trump any supply-driven price support for fed cattle in the short run.


NDSU Agriculture Communication

Source:Tim Petry, (701) 231-1059, tim.petry@ndsu.edu
Editor:Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
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