A few thoughts by John Nalivka: Cattle inventory dynamics during 2017
December 1, 2017
Total cow slaughter will end this year about 6 percent higher than a year ago. This is the highest since 2013 when the cattle inventory was 5 percent lower than this year's beginning inventory and producers were still adjusting herd size to drought. Looking at the beef and dairy herds separately, beef cow slaughter YTD through the week ending Nov. 18th is up 10 percent from a year earlier while dairy cow slaughter is up 4 percent YTD.
Beef cow slaughter this year might suggest producers have liquidated herds or at best, held cow numbers even with a year ago. This analysis might be even further supported by a 12 percent YTD increase in heifer slaughter. However, I still think there was a large number of bred heifers that calved this year and not only maintained the herd size but continued to grow the herd. My estimate for beef cow slaughter for 2017 indicates producers culled and sent to slaughter about 9 percent of the beef cows – not too much of an increase over a year ago. When producers are liquidating herds, that figure is 11-12 percent. In addition, the suggested number of heifers calving and entering the herd is not out of line even in the face of sharply higher heifer slaughter. The number of bred beef heifers at the beginning of the year was the largest number since USDA added that figure to their inventory survey in 2001.
Cattlemen's prospects and subsequently, their outlook for 2018 continued to improve as the year progressed with prices higher than projected at the beginning of the year coupled with good grazing conditions and low grain prices. So, my conclusions – a 2.5 percent increase in the beef cow herd is not unreasonable.
On the dairy side, low milk prices and break-evens would have suggested higher dairy cow slaughter than the 4 percent YTD we have seen so far into mid-November. On a weekly basis, dairy cow slaughter has fallen below a year ago for the first 3 weeks of November. I will fall back on my contrarian view of how dairymen react to negative margins – keep milking the same number of cows because revenue is a function of quantity and price. Dairy cow slaughter as a percent of the number of cows in the herd actually holds fairly steady as does the number of heifers brought into the milking herd. So, I am concluding not much change in the size of the dairy herd this year and we start next year with nearly the same number of cows as this year. I would also add that optimism for dairy product exports, the impact of sexed semen to breed for heifer calves, low feed prices, and optimism for robotics to replace labor in the milking parlor all contribute toward maintaining the dairy herd. This, all in the face of increased production efficiency.
So adding my projections for a 5 percent larger calf crop this year together with a larger beef herd and stable dairy cow herd that I have described above, would result in nearly a 3 percent increase in the total U.S. cattle inventory during 2017.