There is still a lot of rebuilding to do as cattle inventories continue to decline nationally.
By: Darrell Mark, SDSU Extension
USDA National Agricultural Statistics Service (NASS) released its semi-annual Cattle inventory report on July 25. This report, which provides a more comprehensive estimate of the number of cattle and calves in the U.S. across several classes, was not issued last year due to budget sequestration. Thus, comparisons to July 1, 2012 were offered in NASS’s report and the industry largely did not issue pre-release estimates this year. Still, the report is important to provide information on the mid-year changes in the nation’s cattle herd.
NASS estimated that the total number of cattle and calves in the U.S. on July 1, 2014 was 95.0 million head. That’s 2.8 million head, or 2.9%, less than on July 1, 2012 and about 1.5% less than estimated for July 1, 2013 by the Livestock Marketing Information Center (LMIC). It is also the smallest July 1 cattle inventory total since the mid-year report began in 1973.
NASS estimated that there were 29.733 million beef cows in the U.S. on July 1, 2014, 2.5% less than two years ago and slightly lower than LMIC estimates for last year. Of particular interest in the Cattle inventory report was the estimate for the number of heifers being held for beef cow replacements. At 4.1 million head on July 1, 2014, NASS’s estimate of beef heifer retention is down 100,000 head (2.4%) from July 1, 2012 and LMIC’s estimate for July 1, 2013. This reduction of 2.4% is difficult to reconcile with the 1.7% increase in the number of beef heifers being retained on January 1, 2014. Typically, this would imply that more retained heifers were culled between January and July and sent to feedyards. However, the number of heifers on feed has been sharply lower throughout 2014. According to NASS’s July Cattle on Feed report, also released last Friday, the number of heifers on feed on July 1, 2014 was down 4.6% compared to a year ago. Typically, the "cull rate" of beef heifers being held for replacements on January 1 is 15-20% by July 1. In other words, the number of beef heifers being retained on July 1 is usually between 80% and 85% of the number of heifers being retained for breeding on January 1. However, based on NASS’s estimate for July 1, 2014, only 75% of the beef heifers retained on January 1, 2014 were still being held as replacement stock on July 1, 2014. Based on improved pasture and range conditions and record high profit potential, it doesn’t seem likely that heifer cull rates would have increased in 2014. Possibly, this relationship and the lower heifer retention reported overall is a reflection of the difficulty in estimating this figure, particularly when the report was not issued in the previous year.
NASS indicated in its Cattle inventory report that the number of non-replacement heifers weighing more than 500 lb was 6.9 million head, which is 6.8% less than two years ago. So, the availability of heifers for placing on feed or for additional replacements is decreasing. The number of steers weighing more than 500 lb was 13.5 million head on July 1, 2014, down 3.6% from 2012. The number of steers, heifers, and bull calves weighing less than 500 lb was down 3% at 25.7 million head. Thus, the estimated number of feeder cattle available to be placed on feed was 34.5 million head, about 3% lower than two years ago.
The mid-year Cattle inventory report also provides NASS’s first estimate of the year’s calf crop. In the report released last Friday, NASS projected the 2014 calf crop at 33.6 million head. That would be 330,000 head, or 1%, less than the 2013 calf crop. This will be the smallest calf crop weaned in at least 54 years. As a result, supplies of calves will remain very tight for at least another year.
NASS estimated the total number of cattle on feed in feedyards of all sizes was 11.6 million head on July 1, 2014. That’s down 5.7% compared to two years ago. According to NASS’s monthly Cattle on Feed report, there were 10.127 million head of cattle on feed in feedyards with 1,000+ head capacities (Table 1), which is 5.4% less than two years ago. Thus, the implied number of cattle on feed in small feedyards (less than 1,000 head capacities) was 1.473 million head, down 7.4% from two years ago. So, it appears that the nation’s larger feedyards are now feeding a slightly larger percentage of the cattle on feed, which isn’t surprising given the very tight supply of feeder cattle. The recent large drop in corn prices, however, might re-instate some farmer-feeder interest in backgrounding and finishing cattle in the upcoming year.
June marketings, according to the monthly Cattle on Feed report, were 1.847 million head (Table 1). While this nearly 2% decline from June 2013 was relatively close to pre-release expectations, average daily marketings were actually down 6.4% due to June 2014 having one more slaughter day than June 2013. Marketings as a percentage of the on feed inventory, though, were nearly unchanged from a year ago. Interestingly, even though the number of cattle on feed for more than 120 days seasonally declines during the summer months, July 1, 2014 was the first time in 18 months that the number of cattle on feed for more than 120 days was above year-ago levels. This is a result of placing more lightweight calves on feed in the past several months as the supply of feeder cattle grew increasingly tight.
The June placement data indicated that cattle feeders continued to place proportionally more light weight calves on feed. Feeders placed 400,000 head of calves weighing less than 600 lb, which was 27% more than a year ago. Placements of 600-699 lb calves totaled 245,000 head in June, 8.4% more than in June 2013. Placements of feeder cattle weighing more than 700 lb totaled 810,000 head, nearly 20% lower than a year ago. Total placements in June 2014 were 1.455 million head, 6.2% less than a year ago (Table 1).
The Cattle on Feed report generally confirmed analysts’ expectations for lower placements, marketings, and on feed inventory. With reported numbers close to pre-release expectations, little market reaction is expected from this report. Similarly, most of data in the mid-year Cattle inventory report were likely consistent with many analysts’ thinking, with the notable exception of the lower number of beef heifers being retained. While this doesn’t necessarily indicate that the beef cow herd won’t grow by the end of the year, it does suggest that any increases would be small and the January 1, 2015 inventory estimates will be important.