The USDA’s cattle inventory report further supports the belief that the cow herd is done expanding.
Josh Maples, Extension ag economist with Mississippi State University, says a stable herd and lower replacement heifers were what most analysts expected ahead of the report.
“There has been plenty written about the current cattle cycle topping out, and this report was another piece of evidence supporting that story,” he writes in his “In the Cattle Markets” column.
“The July report marked the fourth consecutive January or July report that showed less than 1% growth compared to the previous year. While still not a decline, these modest or flat growth numbers are a contrast to the rapid growth from 2015-2017.”
Maples says the end of expansion is a good time to take a long-term look at the cattle cycle. He says the estimated calf crop this year of 36.3 million head will mark the first such decline year-over-year since 2014.
“Cattle on feed are at record large levels that would be expected at the peak of a cycle,” he says. “However, dressed weights have moderated over the past few years and especially in the past few months, which has softened some of the impacts of larger cattle inventories on total beef production.”
Maples says June was the ninth consecutive month of lower federally inspected steer dressed weights compared to the five-year monthly average.
“This is pretty rare given that dressed weights have been increasing for decades, but not too unusual when in the context of the current cycle,” he says. “The same streak of declines occurred in 1996-1997, which was the peak of the 1990-2004 cattle cycle, and there was also a similar period in 1984 which was near the peak of the 1979-1990 cycle.”
Maples says while cattle numbers have leveled off for the most part, it is a different story in the beef market.
“The natural lags in the cattle and beef sector cause beef production to peak later than cattle do,” he says. “Beef production will continue to be bigger for the next few years while these supplies work through the beef supply chain.”