U.S. live cattle herd declines

Sustained droughts not only pushed more cattle to slaughter in recent years, but has also kept the overall herd numbers down as ranchers retained fewer heifers.

The U.S. Department of Agriculture has reported the national herd totaled 90.8 million head of cattle and calves on Jan. 1, down 2% from a year ago. The recent cattle inventory is the lowest Jan. 1 reading since 1952. The herd includes 29.9 million beef cows and 9.2 million milk cows, down 3% and 1% respectively, from a year ago.

Calf numbers are also lower, with 35.3 million head in 2011, dipping 1% from 2010. This is the smallest calf crop since the 34.9 million born during 1950, according to USDA records.

Tighter cattle supplies are a concern for local beef packers like Tyson Foods and beef eating consumers. Tyson purchases the cattle it slaughters for processing and has said the company does not foresee any major supply problems in the near term, despite higher prices.

In fact, beef packers have been scaling back production in recent months to stem hefty losses as retail demand for beef has been tepid. The USDA estimates beef packers averaged a net loss of $85 a head in the past four months.

The recent inventory found 14.1 million head of cattle and calves on feed for slaughter in all feedlots. This number rose about 1% from a year ago. The combined total of calves, heifers and steers outside of feedlots totaled 25.7 million, falling about 4%.

Analysts expect retail beef prices will move higher as the summer grilling season approaches.

Steve Kay, publisher with Cattle Buyers Weekly, says as the herd shrinks, a protein hole is created around consumption. With less, yet more expensive beef available, he said consumers will likely eat more chicken and pork.