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U.S. cattle numbers down, but hints of increase in report

 

By TIM THORNBERRY

Kentucky Correspondent

 

FRANKFORT, Ky. — The January cattle inventory report from the USDA contained good news even if it wasn’t evident at first glance.

According to the USDA’s National Agricultural Statistics Service Kentucky field office, cattle and calf inventory for Jan. 1 was estimated at 2.06 million head; the total inventory was down 50,000 head from last year with five classes showing decreases from the previous year.

That really wasn’t news to cattle producers. The cow herd in Kentucky and across the country has been low over the last few of years. But the latest report also shows indications those declines are about to change. The USDA report stated, nationally: "Cows and heifers that have calved were estimated at 1.07 million head, up 10,000 head from the 1.06 million for 2014. Beef cow inventory was estimated at 1.01 million head and milk cows were estimated at 63,000 head."

Kenny Burdine, an agricultural economist and livestock specialist at the University of Kentucky College of Agriculture, Food and Environment, said there are a couple of items of particular interest in that report. "Beef cattle numbers across the country were up by about 2 percent, which was higher than a lot of people estimated," he said. "I think that was primarily because this cow herd was fairly young coming into 2014 and we just didn’t cull as hard."

He also said cow slaughter was down substantially from where it us in 2013.

"I think the increase in beef cow numbers was mostly due to (producers) keeping the cows a little longer," he said. "The other number that a lot of people will focus on, and rightfully so, is there is a 4 percent increase in the number of heifers held for beef cow replacement."

Both of these numbers point to a slightly higher cow herd in the next few years. The heifer replacement number equates into about additional 226,000 more being held for beef cow replacements.

"My guess is this herd grows about another 1 or 2 percent between now and 2016, and I would guess that if prices stay where they are and the weather cooperates, we’ll see two to four years of expansion," said Burdine.

While cow numbers are low even with the increases noted in the latest inventory report, cattle prices have remained high even with slight declines experienced by the end of last year.

But cattle producers are getting increased competition from pork and poultry producers, something that may be reflected at selling time.

Burdine estimates about a 2 percent increase in breeding stock for hogs and, according to the last estimate from the USDA, a 3 percent increase in poultry production.

"Anytime you see increased production in competing meats, that tends to put some price pressure on beef, which we have already seen somewhat and will continue to see for 2015," he explained.

Burdine also thinks by fall, cattle prices may be down slightly, by $20-$30 per cwt. compared to what prices were in the fall of 2014. "It’s still a very good market, but not as high as what we saw last fall," he said.

"My guess is we’ll kind of look back and see 2014 as our peep of this cattle cycle. The exception will be when grass comes this spring, calf prices will rise again."

He added while the price levels are still good for cow-calf producers, for margin operators such as backgrounders and stock operators, the market swings are especially challenging.

2/25/2015