Cattle report shows effects of drought, high production costs

The USDA"s 2013 Cattle report, released February 1, shows the nation"s total cattle inventory contracted another 2 percent to 90.8 million head during 2012, reaching its lowest level since 1952. Beef cows, at 29.3 million head, are down 3 percent from a year ago.

The figures show that cow-calf producers, faced with feed shortages and high costs, have continued sending more cows to market. Traditionally, U.S. beef-cattle numbers have followed a "cattle cycle" with about 10 years between peaks. When numbers reached a level where prices declined, producers would begin culling more cows and marketing more heifer calves to boost their returns. After four or five years of contraction, prices would rise high enough to motivate producers to rebuild, primarily by retaining more heifers for breeding. Due to the length of the beef-production cycle, it takes several years for increased heifer retention to bring about larger supplies of fed cattle and beef. Hence the typical 10-year cattle cycle.

In recent years though, market disruptions and extended drought in key production areas have interrupted the cycle and prevented a shift toward an expansion phase.

In fact, it appears 2012 will mark the 18th consecutive year of smaller calf crops. The report estimates the 2012 calf crop at 34.3 million head, down 3 percent from 2011. This is the smallest calf crop since 1949, when 33.7 million calves were born. Calves born during the first half of 2012 are estimated at 25.0 million, also down 3 percent from 2011. This report estimates the numbers for the fall calf crop, and final numbers will appear in the mid-year inventory report in July.

There is some sign however, that herds could begin to grow, as the report lists beef replacement heifers at 5.4 million, up 2 percent from a year ago. The outlook for forage production and grain prices later this year will dictate whether producers around the country begin keeping more heifer calves as replacements, and market analysts will be watching the weather closely as we move into the spring and summer of 2013.

If producers do retain more heifers, the short-term effect will be a further reduction in feeder-calf supplies, fed cattle and beef production.

Other key figures in the report include:

  • Steers weighing 500 pounds and over are unchanged from a year ago at 15.8 million head.
  • Bulls weighing 500 pounds and over, at 2.1 million head, are down 2 percent.
  • Calves under 500 pounds also are down 2 percent at 13.8 million head.
  • Cattle and calves on feed for slaughter in all feedlots are at 13.4 million head as of January 1, 2013, down 5 percent from a year earlier.
  • The combined total of calves under 500 pounds and other heifers and steers over 500 pounds outside of feedlots was 25.5 million, up 1 percent.

View the full report from USDA.


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