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Cattle Inventory; herd continues to shrink

Cattle and Beef Markets
Aug 4, 2014

— Herd rebuilding will be slow, calf supplies tight through 2016

Two key cattle reports were released at the end of July: the biannual Cattle Inventory report and the monthly Cattle on Feed report. The reports were called bullish with both the Inventory report showing continued tightening of the cattle herd and the Cattle on Feed report showing decreased populations, placements, and marketing activity.

The cattle herd is down in all relevant areas for the beef sector. Total cattle and calves (beef and dairy) as of July 1 stood at 95 million head, down 3 percent compared to July 1, 2012. Recall that the July 2013 Cattle Inventory report was canceled due to the sequestration. The January 2014 report pegged the national herd at 87.73 million head.

The beef cow herd was estimated at 29.73 million, down 3 percent from the July 2012 report, but up slightly from the January 2014 report. The dairy cow herd increased by 1 percent with 9.27 million head.

But the number many in the beef community were anticipating was the beef heifer replacements. And they were sadly down. At 4.1 million head, the number of heifers over 500 lbs. held for beef cow replacements was down 2 percent compared to July 2012 and down significantly from the hopeful 5.47 million quoted six months ago.

“This number implies that the herd rebuilding process will take significantly slower than many expect and the beef industry will have to contend with tight feeder cattle supplies through 2016,” noted Steve Meyer and Len Steiner of the CME Daily Livestock Report.

The other number that had many people holding their breath was the estimated calf crop for 2014. At an estimated 33.6 million head, the 2014 calf crop is down 2 percent compared to the July 2012 estimate and down slightly from the 33.96 million head estimated six months ago.

All this—cow numbers, replacement heifer numbers, and the estimated calf crop—simply underscore what analysts have been saying for the better part of the year: cattle supplies are and will continue to be very tight for the foreseeable future.

Cattle on Feed

For the most part, the most recent Cattle on Feed report was close to pre-report expectations. Except for placements. Again.

The July 1 on-feed population in feedlots with 1,000-head or greater capacity stood at 10.13 million head, down 2 percent from last year’s 10.38 million head. The decline was right in line with pre-report estimates. With the exception of Nebraska, all the major cattle-feeding states saw on-feed population declines.

Nebraska continues to vie for dominance in the ranks of the top cattle-feeding state with 2.26 million head on feed, a 4 percent increase over 2013. Texas still has the highest population with 2.49 million head, but that was a 3 percent decline following many months of declines.

Colorado fell behind 5 percent with 870,000 head on feed and Kansas dropped below 2 million with 1.9 million head on feed, a 6 percent decline. Iowa has been making ongoing strides towards ousting Colorado as part of the top four. At 670,000 head on feed, it increased 7 percent over July 1 2013.

Placements surprised again, making this most recent report bullish. Contrary to average pre-report industry estimates that placements would decline 3.8 percent, placements of 1.46 million head into feedlots during June represented a 6 percent decline.

Again, as with on-feed populations, state-by-state placements had Nebraska dominating over the other top four cattle-feeding states.

With 375,000 head placed into feedlots during June, Nebraska saw a whopping 14 percent increase compared to the same time last year. This volume also had it over Texas in terms of placements, which narrowly missed the mark at 370,000 head placed, a decline of 13 percent. Kansas placed 315,000 head, down 10 percent from last year, and Colorado saw the steepest declines, shedding 17 percent by placing only 95,000 head.

Placements by weight in June still favored heavy cattle by volume, but the lightest cattle saw the strongest growth. Fourhundred thousand head of cattle under 600 lbs. were placed during June, a 26.9 percent increase over the same time last year. Sixweight cattle only had 245,000 head placed, but still saw some growth with 8.4 percent more placed this year compared to last. Cattle weighing between 700-799 lbs. saw 320,000 head placed, a decline of 22 percent. And the heaviest cattle, those weighing 800 lbs. or more, saw an 18.4 percent decline with 490,000 head placed.

Marketings, like on-feed populations, declined 2 percent as expected. Marketings of 1.85 million were right in line with pre-report estimates, but still represented a record low marketing rate for June for as long as the Cattle on Feed report has been conducted.

In the case of marketings, the major cattle-feeding states saw their numbers up. Except for Texas.

Texas’ marketing rate fell 12 percent with 420,000 head marketed. The other three states increased their marketing rate with Kansas leading the pack for growth at up 8 percent also with 420,000 head marketed. Nebraska’s 500,000 head marketed represented a 4 percent increase over the numbers of June 2013, and Colorado’s marketing rate increased 3 percent with 150,000 head marketed. — Kerry Halladay, WLJ Editor

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