Last spring I indicated U.S. cattle inventory growth would stall during 2019 and the January 1, 2020 inventory would be down from the beginning of 2019. I have maintained this forecast since that time with my current projection for the U.S. cattle inventory on January 1 at 93.125 million, down 1.6% from the 2019 beginning inventory. This would be the lowest cattle inventory since 2016.
Without getting too deep into the weeds with numbers, I do think there are a few things worthy of discussion in the analysis to arrive at my projected inventory. First, I have argued that USDA’s estimate of the 2019 calf crop was overstated by about 250,000 to 300,000 head. This may be the result of the timing of the survey with the final death loss from the floods not yet fully known. I am assuming the much smaller 2019 calf crop in my inventory analysis.
Furthermore, the 2018 calf crop may have been overstated. I base this conclusion on 2019s steer slaughter. Slaughter in 2019 was running at 2% under the prior year and accounting for only 45% of the 2018 calf crop. Statistically, I think that figure poses a problem. Steer slaughter typically accounts for 47% to 49% of the previous year’s calf crop. That would be expected – unless bulls now comprise a much smaller share of the calf crop and I don’t think that is the case! I go with thinking the 2018 calf crop estimate is overstated. The slaughter data is more reliable than inventory surveys.
Last but not least, cow and heifer slaughter. Decisions concerning females in the herd drives changes in the size of the herd, both on the ranch and for the entire country. We know that. For 2019, total cow slaughter will be up 3% from 2018’s 7% increase. Beef cow slaughter will be up 5% from 2018 - the highest since 2012 as severe winter weather, floods, and market uncertainty took a toll. Dairy cow slaughter was up 2% during 2019 and the highest since 1986 as dairymen also liquidated cows due to severe financial stress in the first half of the year.
And heifers - I am estimating heifer slaughter to end the year up 7% from 2018 and the highest since 2007, a figure that would not come close to compensating for the stepped-up culling of cows discussed in the previous paragraph. Heifer slaughter during 2019 accounted for 30% of total cattle slaughter compared to 28% a year earlier and 26% during 2014.
Backing out of the weeds, the numbers point toward or assure, that herds were liquidated during 2019. For many ranchers, as we enter 2020, that’s really good news. Demand has improved in the last 5 years. If it continues to improve or at least remains steady – and I am optimistic – decreased cattle numbers will mean higher prices. 2020 will be a much better year!