Both the Cattle inventory and Cattle on Feed reports were released last week, and most analysts believe there were very few surprises.
Jason Franken, an ag economist with Western Illinois University, says the inventory report is a solid indication that cow herd expansion is over.
“The U.S. cattle herd is known to cycle through periods of expansion and contraction roughly every 10 years or so,” he says in his analysis on farmdoc daily. “High feed prices from 2007 through 2013 contributed to one of those contraction phases with beef cow numbers reaching a low in 2014.
“Of course, low supplies translate into higher prices, motivating producers to expand. Currently, there are over 7% more beef cows in the U.S. than during the low point in 2014. Last January showed signs that the expansion of the beef herd was leveling off, and recent reports suggest that appears to remain the case.”
The inventory report said the total number of cattle on July 1 was 103 million head, just a tick above numbers from a year ago. Calf numbers were 41.4 million head, a half percent below 2019 numbers.
“With somewhat fewer cows and heifers calved, the USDA has revised downward its January estimate of the 2020 calf crop to 35.8 million head, so that, consistent with pre-report expectations, it is now 1% below the 2019 level,” Franken says.
USDA’s Cattle on Feed report indicated 11.4 million cattle on feed, down less than a half percent from a year ago. Franken says this number met pre-report expectations.
June placements were up 2% from a year ago, while marketings were up 1%.
“Each of those numbers was within the expected ranges but somewhat lower than the ranges’ midpoints,” Franken says. “The slightly lower number of cattle-on-feed reflects 1.5% fewer heifers and 0.3% more steers than a year ago.
“Even so, heifers still comprise over 38% of the cattle currently in feedlots, as compared to only 31%-33% during much of the last expansion. This is additional evidence that the breeding herd is leveling off or at least not expanding.”