Liquidation Continues for US Cattle Herd

US - The US cattle herd continues its protracted decline, with the United States Department of Agriculture (USDA) reporting a 500,000 head fall for the second consecutive year, to 104.3 million head as at July 1.
calendar icon 4 August 2008
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This is the third smallest July 1 cattle inventory on record – the smallest being in 2004, at 103.6 million head reports Stock and Land.

With high input costs, continued drought in some regions (particularly Georgia) and a softer US economy, the US cattle industry continues to face challenging trading conditions and squeezed profit margins, the USDA says.

The numbers of heifers for beef cow replacement were down by a further 2pc on 2007, at 4.6 million head.

The rate of decline came under what analysts were expecting, but still indicates that a high percentage of heifers are being placed on feed rather than retained for herd rebuilding.

Fewer beef replacement heifers and a 6.5pc rise in beef cow slaughter in 2007-08 has seen the beef cow inventory down 200,000 head, to 33.15 million – the smallest since 1990.

Considering the reduced and late plantings of US corn (and damage from flooding in June), continued drought in some key cow-calf areas and increasing input costs, operating profits for cow calf operators, backgrounders and feeders are likely to remain under pressure.

Hence, the US is unlikely to be expanding the cattle herd in the near future, according to the USDA.

While cow slaughter is expected to return to year ago levels for the second half of 2008 (after being 9pc higher in the first half), both the inventory report and lower placements of cattle onto feed suggest that US beef supplies will tighten in the short term.

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