1 February 2011

5 minute read

North America

This was expected given that slaughter of cull cows was 4.8 per cent higher during 2010 than in 2009. Although cattle prices were strong in 2010, feed prices are high and the weak US economy impacts negatively on cow-calf producers, many of whom have off-farm employment.

Revisions. There were several upward revisions of data from the January 2010 inventory survey. The size of the 2009 calf crop was revised upward by 120,000 head (0.34 per cent) and the January 2010 cattle inventory increased by 0.19 per cent. This upward adjustment brings the calf crop more in line with the placements and marketings from the monthly cattle on feed data.

Total Inventory. The total number of cattle and calves in the US on 1 January 2011 was 92.6 million head, down 1.4 per cent from 2010 and 4.1 per cent lower than at the last cyclical peak in 2007. This is the lowest January cattle inventory since 1958.

Calf Crop. The 2010 calf crop is estimated to be 35.7 million head, down by 0.7 per cent from a year earlier and the smallest calf crop since 1950. The size of the calf crop has declined each year since 1995.

Cow Herd. The inventory report shows that the number of beef cows that have calved (30.9 million) was 1.6 per cent smaller than on the same date last year. The number of dairy cows that have calved (9.1 million head) was up 0.7 per cent from a year ago. The combined cow herd is 1.1 per cent smaller than in January 2010.

Replacement Heifers. There were 5.2 million beef heifers being held on 1 January to add to the cow herd, 5.4 per cent fewer than January 2010. The number of beef heifers expected to calve in 2011 was down 7.2 per cent. The number of dairy replacement heifers, 4.6 million head, was up 0.7 per cent from 12 months earlier. The number of dairy heifers expected to calve this year is up 2.9 per cent. The combined number of replacement heifers is down 2.6 per cent from a year-ago. When added to the inventory of cows that have calved, these data imply the 2011 calf crop should be roughly 1.3 per cent smaller than last year’s crop.

Feeder Cattle Supply. At the start of the year, the number of steers weighing 500 pounds and over was down 0.8 per cent; the number of 500-pound-plus heifers not being held for cow replacements was up 0.5 per cent; and the number of calves weighing less than 500 pounds was down 3.2 per cent from a year ago. In total, the inventory of feeder cattle was 1.4 per cent smaller than 12 months earlier.

Cattle Slaughter. For 2011, fed slaughter is expected to be slightly lower than a year ago. The number of cattle on feed on 1 January was up 2.8 per cent in total, with the number on feed in feedlots with one-time capacity of 1,000 head or more up 4.6 per cent. Slaughter of cull dairy cows is expected to be higher in 2011. A modest decline in beef cow slaughter is expected.

Summary. Breeding animal numbers imply the January 2012 inventory will be 1.0 per cent to 1.5 per cent smaller than the 2011 number. Lower inventories should mean stronger prices. It appears that 2011 fed cattle prices will average over $100/cwt with 2012 prices higher still. High corn prices should hold down feeder cattle prices in coming months. US beef exports are expanding. Through November, beef exports were 17.7 per cent above year-ago levels. As expected during a worldwide recession, meat demand was soft in 2009 and early 2010. If the economy grows, then beef demand should improve. Demand for slaughter steers and heifers was up over 10 per cent during the fourth quarter of 2010 compared to a year earlier. The strengthening income picture for cow-calf operations should slow beef cow slaughter and eventually lead to herd expansion.

The data from USDA’s January 2011 cattle inventory report is in the table below.

Inventory of Cattle and Calves, January 1, 2009-2011

Actual federally inspected cattle slaughter and prices for 2008, 2009 and 2010 along with our forecasts of slaughter levels and prices in 2011 are given in the table below.