Weekly Cattle Outlook: Cattle Herd Continues To Shrink

US - USDA's July cattle inventory report said the cattle herd is continuing to shrink. The July inventory of 100.8 million head was 1.2 per cent lower than a year ago and 3.8 per cent lower than the last cyclical peak in 2006, writes Ron Plain from the University of Missouri.
calendar icon 9 August 2010
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Ron Plain
Ron Plain

USDA predicts the 2010 calf crop will total to 35.4 million head, 1.2 per cent fewer than last year, down for the 15th year in a row, and the smallest calf crop since 1950. The US population has doubled since 1950, but we are raising no more calves. However, because of heavier slaughter weights and increased beef imports, per capita beef consumption this year will be higher than in 1950.

It is likely the cattle herd will be smaller again next year. The number of cows that have calved is 1.4 per cent smaller than last year. The inventory of beef cows was down 1.6 per cent and dairy cow numbers were down 1.1 per cent. The total number of replacement heifers is the same as last year. Beef replacement heifers were down 2.2 per cent at mid-year and dairy replacement heifers up 2.5 per cent.

The inventory of feeder cattle was down 1.2 per cent on July 1 compared to a year earlier.

The inventory numbers are not encouraging for the dairy industry. The combined number of dairy cows and replacement heifers is the same as July 1, 2009. Milk prices will have a difficult time staying profitable without a cut in cow numbers.

It is a bit surprising that beef cow slaughter has remained so high (up 12 per cent through mid July) and heifer retention so low with calf prices back to a profitable level. It could be that cattlemen are cashing in on high cow prices to shore-up cash flow problems caused by the weak US economy.

On Friday morning, the choice boxed beef carcass cutout value was $1.5072/pound, down from $1.5151/pound last Friday. The select cutout was $1.4392/pound on Friday.

The 5-area daily weighted average price for slaughter steers sold through Thursday of this week on a live weight basis was $92.99/cwt, up from $92.87 a week earlier. Steers sold on a dressed weight basis this week averaged $147.35/cwt as compared to $147.85 the week before.

The price ranges this week at Oklahoma City for medium and large frame feeder steers were: 400-450# $132-$140, 450-500# $126-$137, 500-550# $120-$124, 550-600# $117-$125, 600-700# $105-$120, 700-750# $113.50-$117.75, 750-800# $110-$114.50, and 800-1000# $99.75-$112/cwt.

This week's cattle slaughter totaled 654,000 head, the same as the week before but up 4.6 per cent compared to the same week last year.

Steer carcass weights averaged 836 pounds during the week ending July 24. That compares to 832 pounds the week before and 847 pounds the same week last year. This was the 35th consecutive week with steer weights below year earlier levels.

The August fed cattle futures contract ended the week at $92.77/cwt. The October contract closed at $95.50/cwt and the December contract settled at $97.40.

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