U.S. cattle herd liquidation continues, down to 1951 levels

The annual cattle inventory report confirmed that the U.S. cattle herd shrunk 2% from a year ago, according to a U.S. Department of Agriculture annual report. What's more, the 87.7 million head of cattle and calves is the smallest U.S. herd since 1951, according to Derrell Peel, livestock marketing specialist with Oklahoma State University.

The beef cow inventory was 29 million head, down 0.9% from last year and the smallest beef cow herd since 1962. The numbers indicate that the industry is poised to begin rebuilding in 2014, weather permitting, Peel said.

Among the 10 largest beef cow states, the cow herd was up in five states and down in five. The largest decrease in cow numbers occurred in Texas, followed by South Dakota, Montana and Kentucky and Nebraska. Beef cow numbers increased in Arkansas, Kansas, Missouri, Oklahoma, and North Dakota, Peel notes. On net, he said there was a slight increase in beef cow numbers in the top ten beef cow states. 
 
The inventory of beef replacement heifers was up 1.7%, a bit smaller than pre-report expectations. But Peel notes that the number of beef replacement heifers as a percent of the beef cow herd, at 18.8% was the largest in more than 20 years, including the last cyclical expansion in the early 1990s. Beef replacement heifers increased in seven of the top 10 beef cow states, resulting in a 4.1% net gain.

Peel said only Montana, North Dakota and Kentucky had fewer replacement heifers compared to last year while Texas, Missouri, Oklahoma, Nebraska, South Dakota, Kansas and Arkansas had an increase from 2013. Oklahoma led the increase among states with 45,000 more beef replacement heifers, an increase of 16.1% year over year. Arkansas’ beef replacement heifers increased 6.2% year-over-year to 137,000 head, according to the USDA report.

The 2013 U.S. calf crop was 33.93 million head, down 1% from 2012. A smaller calf crop, combined with increased heifer retention and fewer feeder cattle imports, resulted in a 2.7% decrease in estimated feeder cattle supplies. As of Jan. 1, there were 24.8 million head of feeder cattle, down from 25.5 million head one year ago. Inventories of steers over 500 pounds were down 2.5%, calves under 500 pounds were down 3.7% and other (not for replacement) heifers were down 5%, Peel notes.

The fact that cattle on feed was also down 5% limited the decrease in estimated feeder supplies outside of feedlots to 2.7%. Estimated feeder supplies as a percent of the 2013 calf crop was 72.9%, down from 74.2% past year and below the ten year average of 74.4%. This indicates that a smaller than average percent of feeder cattle supplies were carried over from 2013 into 2014. 

The number of cattle grazing small grains pasture on Jan. 1 in Kansas, Oklahoma and Texas was 1.61 million head, up 20% from last year and the highest total for the region since 2010. The share of estimated feeder supplies in these three states on January 1 increased to 25.7% up from the 2013 low of 25.1 percent but still below the ten year average of 28.3 percent.
 
The Jan. 1 cattle inventories for all cattle as well as beef cows can be the lows from which the industry rebuilds over the next several years, Peel said. However, the industry is vulnerable to drought conditions that could re-intensify this spring and postpone herd expansion once again. Market signals for expansion are strong and growing and the industry is poised to respond. 

“We know what we want to do; we just don’t know what Mother Nature is going to let us do,” Peel said.