Dr. Curt Lacy (UGA)
On Friday, January 27, USDA-NASS released the much anticipated Cattle Report. This annual report is the one report most cattle market forecasters hang their hat on because it contains all of the reported inventories of beef cows, dairy cows, total cattle and calves, as well as a whole host of other cattle statistics.
For beef cattle producers, the most important numbers reported were a decline in the beef cow herd of almost 1 million head to 29.88 million cows. This drop of 3 percent was below the average of most forecasters but well within the range of expectations.
The severity of the ongoing drought was made evident by the reduction of almost 1 million cows. Virtually all of this reduction came from Texas and Oklahoma where beef cow inventories were down 948,000 compared to one year ago.
In the Southeastern US (AL, FL, GA, SC, NC, and TN), beef cow numbers decreased by about 12,000 cows (Figure 1) to 3.9 million. That number is a little misleading though as Alabama and Tennessee were the only states to report decreases. All other states either remained steady or increased their numbers.
It is interesting to note that even though beef cow numbers were down for the US and the Southeast, heifers held as replacements were up compared to 2011. For the US, the number was up 1 percent to 5.2 million.
In the Southeast, heifer numbers were up not quite one percent to 532,000. Curiously, all states in the Southeast reported either an increase or no change in heifer retention numbers. Even Alabama and Tennessee who reported net beef cow reduction actually increased their heifer numbers by 6,000 head.
So, what does all of this mean? In short, higher prices. The drop in beef cow numbers was slightly larger than expected and replacement heifer numbers were higher than expected. While it is too early to say that herd expansion is under way, it is safe to say that feeder cattle supplies will be reduced this year.
How much weight buyers and traders put on this information is hard to say at this point. However, it is hard to see how any of this is not good news for cattle markets for the next few years.