14 February 2013

4 minute read

North America

Ron Plain

Although cattle prices were record high in 2011 and 2012, a severe drought in the southern plains in 2011 and in the Midwest in 2012 forced a lot of cattle to slaughter. The Texas beef cow inventory is a remarkable 1 million head (20 per cent) smaller than two years ago.

Revisions. There were a large number of revisions from the January 2012 inventory survey. The beef cow inventory was revised upward by 275,000 (0.9%). Beef replacement heifers was increased by 50,000 (1.0%) and dairy replacement heifers increased by 95,000 (2.1%). The number of other heifers was lowered by 195,000 (2.0%).

The number of steers over 500 pounds was lowered by 239,000 (1.5%) and the number of bulls over 500 pounds increased by 44,000 (2.1%). The number of calves weighing less than 500 pounds was reduced by 30,000 (0.2%). The size of the 2012 calf crop was revised down by 221,000 head (0.6%).

Total Inventory. The total number of cattle and calves in the U.S. on January 1, 2013, was 89.3 million head, down 1.6% from 2012 and 7.5% lower than at the last cyclical peak in 2007. This is the smallest January cattle inventory since 1952.

Calf Crop. The 2012 calf crop is estimated to be 34.279 million head, down 2.9% from a year earlier and the smallest calf crop since 1949. 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 (29.3 million) was 2.9% smaller than on the same date last year. The number of dairy cows that have calved (9.2 million head) was down 0.1% from a year ago. The combined cow herd is 2.2% smaller than in January 2012.

Replacement Heifers. There were 5.36 million beef heifers being held on January 1 to add to the cow herd, 1.9% more than on January 2012. The number of dairy replacement heifers, 4.55 million head, was down 1.5% from 12 months earlier. The combined number of replacement heifers is up 0.3% from a year-ago. The number of beef heifers expected to calve in 2013 is up 1.8%. The number of dairy heifers expected to calve this year is down 4.5%. When added to the inventory of cows that have calved, the data imply the 2013 calf crop should be roughly 2.1% 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 0.1%; the number of 500 pound plus heifers not being held for cow replacements was down 2.5%; and the number of calves weighing less than 500 pounds was down 2.3% from a year ago. In total, the inventory of feeder cattle was 1.5% smaller than 12 months earlier.

Cattle on Feed. The number of cattle on feed January 1 (13.3517 million) was down 5.5% from a year earlier. The monthly cattle on feed report said the number on feed January 1 in feedlots with one-time capacity of 1,000 head or more (11.193 million) was down 5.6%. Thus, the number of cattle on feed in feed yards with one-time capacity of 999 head or less (2.1587 million) was down 4.5% from the start of 2012.

Cattle Slaughter. For 2013, fed slaughter is expected to be 1.5% to 2% lower than a year ago. Slaughter of cull cows is expected to be 5-10% lower in 2013.

Summary. Cattle numbers imply the January 2014 inventory will be roughly 1.5% smaller than the 2013 number. Lower inventories should mean stronger prices. It appears that 2013 fed cattle prices will average close to $130/cwt on a live weight basis with 2014 prices higher still.

Through November, 2012 U.S. beef exports were 11.7% below year-ago levels. Domestic demand for slaughter steers and heifers was up a bit over 1% during 2012 compared to a year earlier. Both fed cattle prices and cull cow prices in 2012 were record high for the third consecutive year and will likely be still higher in 2013 and 2014.

The strengthening income picture for cow-calf operations should slow beef cow slaughter and ultimately lead to herd expansion.

The data from USDA's January 2013 cattle inventory report is in the table below.

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