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US Cattle Inventory Continues to Decline

17 October 2012

US - Two years of drought have dramatically impacted the US cattle industry. On top of devastated pasture and range conditions, drought in the Midwest caused surging feedstuff costs. Still, there has been some confusion about the direction and magnitude of change in the size of the beef cowherd. Much of that confusion has been because US beef cow slaughter has been well below a year ago, a trend that is expected to continue during the balance of the year.

According to the Livestock Marketing and Information Centre (LMIC), a ursory look at weekly at monthly beef cow slaughter levels reported by USDA-NASS might lead to the conclusion that the cowherd is no longer shrinking, but that is likely incorrect. Both the beef cowherd and the total inventory of cattle and calves in the US will be smaller as of January 1, 2013; the uncertainty is how much, which will depend mostly on beef cow slaughter levels this fall quarter.

The fourth quarter of calendar year 2012 has just begun and drought, high feedstuff costs, etc., will continue to influence decisions made by cattle producers. Based on data so far this year and forecasts for the fourth quarter, the LMIC has developed preliminary estimates for the January 1, 2013 USDA-NASS Cattle report. Those estimates are first and foremost based on last year’s January 1 report from USDA and their mid-year 2012 national count. As a reminder, USDA reported that the number of beef cows in the US as of January 1, 2012 at 29.9 million head which was down 967,000 head or 3.1 per cent from a year earlier. At mid-year, beef cows were 2.9 per cent below a year ago.

So far this year, beef cow slaughter, based on Federally Inspected (FI) data through the end of September was down 12 per cent from a year ago, dairy cow was up 7 per cent, and total cow slaughter was down 4 per cent. LMIC estimates 2012’s FI beef cow slaughter will be about 460,000 head below year ago. The number of cows slaughtered in the fourth quarter is projected to pick-up seasonally but remain below a year ago. It is critical to remember that the US beef cowherd slaughter in 2011 was nearly 3.8 million head, the largest since 1996. As pointed out above, 2011’s slaughter translated into a nearly one million head decline in the US beef cowherd. As a percentage of the January 1 beef cow inventory, estimated slaughter last year was 12 per cent and this year it will be about 11 per cent. Since USDA began breaking-out cow slaughter data into components (dairy or beef) in 1986, rarely does the herd increase when the annual FI beef cow slaughter is over 10 per cent of the beginning inventory. Typically, beef cow slaughter must be below 9 per cent of the January 1 count to cause the cowherd to grow year-over-year.

Besides the factors discussed above, lots of relationships and data are factored into LMIC’s estimates of cowherd changes including slaughter of Canadian cows in the US and how many heifers become cows during the year. Importantly, as of July 1 of this year, USDA reported heifers held for beef cow replacement purposes were at the same low drought-induced level as in 2011 and were the lowest since that survey began (1973). Those statistics indicate that the number of heifers entering the cowherd remains historically low.

The LMIC currently forecasts that the US beef cowherd decline in 2012 will be at a slower rate than 2011’s. So, as of January 1, 2013 the US beef cowherd is expected to be about 29.4 million head. That would represent an annual drop of 475,000 to 500,000 head (-1.6 per cent) The total cattle and calf inventory could be down close to 2 per cent. All major categories reported by USDA (e.g. dairy cows, calf crop) also should post year-on-year declines.

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