Dr. Curt Lacy (UGA)
On February 1, USDA released their much anticipated Cattle report. This annual report is one of the most anticipated news events for cattlemen, analysts and cattle industry observers because it details the number of cattle that we have by class. As a result, it is very helpful in predicting future market directions.
Several interesting items were contained in this year’s report.
- Jan 1, 2012 beef cow number revised up to 30.16 million.
- Jan 1, 2013 beef cows that have calved down 3% to 29.26 million.
- Beef heifers held as replacements up 2% to 5.40 million.
- Total cattle and calves number smallest since 1952.
- 2011 calf crop lowest since 1949.
Of particular import to beef cattle producers was the fact that beef cow numbers continue to decline (see chart). Even though heifer numbers increased, the magnitude of the cow herd decline more than offset the increase in heifer inventory. In total the “beef cow factory,” which is the sum of beef cows plus beef heifers held as replacements and where we get this coming year’s calf crop, shrunk again by 2.5 percent.
So what does all of this mean? The increase in beef heifers indicates that producers would like to increase their numbers. However, the ongoing drought and continued high cattle prices make this a challenge. With slaughter cow prices at record, or near-record levels and dry pastures, it is going to be difficult for the beef herd to expand. Thus, barring a major shock to the demand side of the market, cattlemen can expect favorable prices at least for the next 2-3 years.