Herd expansion began last year – Hmmm
February 5, 2015
USDA's recently released and closely watched January 1 Cattle Inventory report was a bit of a surprise. Contrary to what many of us in the industry thought, the report indicated both cattlemen and dairymen began expanding herds during 2013. On Jan. 1 of this year, the number of beef cows was up 2 percent from a year earlier and the 2014 calf crop was reported to be 1 percent larger than a year earlier. Furthermore, the Jan. 1, 2014 inventory was revised upward 1 percent to align the cattle inventory with the Census of Agriculture. I don't agree with that revision.
I could spend an inordinate amount of time analyzing and explaining deficiencies in the USDA report, but the report is the report and ultimately, future cattle supplies and markets will judge the report's accuracy. However, I do think a couple of brief comments are helpful.
The information in the cattle inventory report is from a survey and I am surprised that in 2012, in the midst of one of the worst droughts on record in the heart of the country, cattle producers sharply increased heifer retention (+8 percent) and bred these replacement heifers in 2013 to calve in 2014. This is the implication of a 2 percent in the beef cow numbers at the beginning of this year even though beef cow slaughter was down 17 percent from a year earlier.
I would think the more likely scenario was one where the inventory would have been unchanged at the beginning of this year with the increase in heifer retention beginning during 2013. Those heifers would have been bred in 2014 and calved this year. This scenario would be more consistent with increased forage supplies following the 2012 drought and corn prices going from $8 per bushel during 2012 to $5 per bushel in 2013.
So, if we assume the USDA's reported increased cattle inventory is correct, than last year's larger calf crop increases the supply of feeder cattle this year. The supply of market-ready cattle will begin to slowly expand into the latter part of the year and beef production will begin increasing during 2016. This is one year ahead of my scenario of herd numbers increasing this year. Consequently, prices will moderate more quickly, particularly in light of sharply increased pork production and moderately increased poultry production.
One last comment; high cow slaughter from 2008 through 2013 coupled with a relatively large number of heifers entering the herd from 2009 to 2014 (with the exception of 2012) has left the beef cow herd relatively young, efficient cow herd. This is good for the industry. As far as how many cows in the country, only time will tell.