The cattle herd in the United States is at the smallest since 1959, a government report said Jan. 29, but the number was higher than trade estimates and still could weigh on prices.
The U. S. Department of Agriculture’s semi-annual cattle inventory report pegged the U. S. herd at 93.7 million head as of Jan. 1, compared with an upwardly adjusted 94.52 million head a year ago. It was the smallest since the herd totalled 93.32 million cattle on ranches in January 1951.
USDA revised the year-ago number from 94.49 million.
“That’s definitely bearish” to futures, said Jim Clarkson, livestock analyst with A&A Trading Inc.
The 2009 calf crop was the smallest since 1949. USDA put the calf crop at about 35.92 million head, 99 per cent of last year. But this number exceeded the average trade estimate of 35.61 million head.
Traders said the data showed an increase in the number of heifers weighing over 500 lbs., which includes heifers for replacing beef and dairy cattle.
The number of heifers held to replenish the dairy herd was about five per centage points above expectations, coming in at 102.4 per cent of last year.
“They’ve gone through three different buyout programs to get rid of dairy cows and then we see they’ve retained two per cent more dairy heifers. That doesn’t make any sense to me,” said Dennis Smith, broker with Archer Financial.
Traders said the continued shrinkage of the cattle herd could lead to higher beef prices down the road. The industry has been pulling back since 2003 when the United States had its first case of mad cow disease that curtailed exports.
The smaller herd drew positive comments from the National Cattlemen’s Beef Association annual convention in San Antonio attended by 5,600 cattle producers last week.
“We knew the cow herd was smaller. This bodes pretty good for the cow-calf guys provided we get this economy straightened out,” said Steve Fogleson, NCBA president elect.
The recession has had consumers eating out less and buying lower-cost foods when they eat at home. Instead of T-bones and sirloins they are eating lower-priced items such as hamburgers and hotdogs.
“There is only going to be so many fed cattle, but that doesn’t make a darn bit of difference if there is no demand. Right now that demand is in the tank and that is what is going to hold us back,” Fogleson said. “We’ve got to have demand.”