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Market Advisor: Weather Continues to Restrict Cattle Cycle Expansion

The short supply of cattle will be supportive to prices in 2007 and 2008.

Tim Petry, Livestock Marketing Economist

NDSU Extension Service

The USDA National Agricultural Statistics Service (NASS) July 1 cattle report (issued on July 20) confirmed that the normal cattle cycle buildup has continued to be stalled by adverse weather conditions.

All cattle and calves in the U.S. on July 1 totaled 104.8 million head, down 400,000 head from the 105.2 million of last year, but still above the 104.2 million recorded in 2005.

Beef cows that have calved, at 33.4 million head, are down slightly from the 33.45 million reported in 2005 and 2006.

Feeder calf prices have been high enough the last several years to stimulate beef cattle herd expansion, but adverse weather conditions have prevented it from happening.

Last year, extremely dry conditions in the southern and northern Plains caused herd liquidations in parts of those areas. Much of the southern Plains has received ample rainfall this year. The northern Plains also returned to average moisture in much of the area, although parts of North and South Dakota and Nebraska still remain dry.

Interestingly, parts of North Dakota were under some degree of drought for 78 consecutive months from December 2000 to June 2007, according to Adnan Akyuz, North Dakota state climatologist. The most severe drought conditions occurred during the third week of July 2006. At that time, 100 percent of the state was experiencing at least moderate drought status as recorded by the weekly U.S. Drought Monitor ( After having no drought status in June, much of southwestern North Dakota again is recorded as abnormally dry.

The major drought areas in 2007 are in the southeastern and western U.S. In those areas, beef cow herd liquidation has occurred. U.S. beef cow slaughter averaged 11.6 percent higher than last year in the first half of 2007, but was below July of last year. 2006 beef cow slaughter was more than 18 percent higher than in 2005.

The NASS report also showed a 6 percent reduction in heifers retained for replacement compared with last year. There is interest in herd rebuilding in areas that have improved moisture conditions, so more heifers from the 2007 calf crop may be retained.

NASS also released a joint U.S and Canadian cattle inventory report on Aug. 16. The report showed that the Canadian cattle herd also declined. All cattle and calves in Canada as of July 1 totaled 15.9 million head, down 1 percent from the 16 million in 2006 and 6 percent below the 16.9 million of two years ago.

Beef cows that have calved in Canada declined 1 percent in 2007 and were down 6 percent from the peak numbers that occurred in 2005. The 2007 U.S. calf crop was estimated at 37.4 million head, down 167,000 head from last year. However, the supply of feeder cattle outside feedlots was up about 100,000 on July 1 because calves have been staying on pasture longer this year because of the higher corn prices and feedlot costs of gain. There also is improved moisture in much of the Plains.

The NASS cattle-on-feed report released on Aug. 17 showed a 5 percent decline in cattle on feed on Aug. 1, compared with a year ago.

Placements into feedlots during July totaled 1.62 million head, 17 percent below 2006 and 3 percent below 2005. This is the lowest placement figure for July since the series began in 1996.

Placements of cattle less than 700 pounds were down 31 percent, while placements of more than 700 pounds were down only 3.5 percent.

The number of cattle on feed in the southern Plains (Kansas, Oklahoma and Texas) feedlots declined 490,000 head, while the number on feed in the northern Plains (Iowa, Nebraska and South Dakota) increased 25,000 head. This reflects the cheaper cost of corn and the increasing availability of ethanol feed byproducts in the northern Plains.

The shorter supply of cattle will be supportive to prices in 2007 and 2008. Feeder-calf prices are near last year’s levels in spite of higher corn prices and will be the subject of a future Market Advisor column. Fed-steer prices are about $5 per hundredweight higher than last year due to the expanding export markets for beef. Cow prices also are above the levels of a year ago, even though cow slaughter is up. A strong domestic demand for hamburger is supporting prices.

NDSU Agriculture Communication

Source:Tim Petry, (701) 231-7469,
Editor:Rich Mattern, (701) 231-6136,
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