Tuesday’s semi-annual Cattle (Inventory) report showed the total US cattle herd likely was slightly larger than many traders expected, although it had declined significantly from a year ago.
Because the herd is slightly larger than many expected, it’s possible the futures market has a smaller number baked in, and the report will be seen as slightly bearish, a market analyst said.
CATTLE HERD SHRINKS
The USDA Cattle report said all cattle and calves in the US as of Jan. 1 totaled 89.274 million head, down 2.803 million, or 3.04%, from 92.077 million a year earlier.
All cows and heifers that calved last year totaled 38.320 million head down 1.041 million, or 2.64%, from 39.360 a year earlier. This produced a calf crop of 34.465 million head, down 701,000, or 1.99%, from 35.166 million in 2021.
The beef cow herd was pegged at a record low of 28.918 million head, down 1.065 million, or 3.55%, from 29.983 million a year earlier.
The CME Group’s Daily Livestock Report quoted an Urner Barry survey of three market analysts saying they expected the beef cow herd to be down by an average of 4.2% from Jan. 1, 2022, which would have made the latest herd count 28.724 million, and the difference between the reported number and the estimate 194,000.
However, the Jan. 1 beef cow herd also was less than the Jan. 1, 2014, previous record low of 28.956 million, which may be more important to the trade and futures markets than how much the 2022 decline fell short of the expectations of three market analysts.
The low number of beef cows suggests the 2023 calf crop also will drop from last year, meaning feeder cattle supplies could be tight into 2025, since it will take at least two years to turn the tide, the market analyst said. And this is if the drought is broken enough to restock pastures to their pre-drought carrying capacity.
HEIFER NUMBERS ALSO LOWER
All heifers weighing 500 pounds or more totaled 19.173 million head, down from 19.916 million a year earlier, a decline of 743,000, or 3.73%.
Of that, 5.164 million were listed as beef cow replacements, down 318,000, or 5.80%, from 5.482 million a year ago. Of this, 3.169 million were expected to calve this year, versus 3.340 million a year ago, a decline of 171,000, or 5.12%.
Another 4.337 million heifers were set for milk cow replacements, down 104,000, or 2.34%, from 4.440 million a year ago.
“Other heifers” numbered 9.672 million head, down from 9.994 million a year ago, a dip of 322,000, or 3.22%.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $156.00 to $157.50 per cwt, compared with last week’s range of $154.80 to $160.00. FOB dressed steers, and heifers went for $244.80 to $246.95 per cwt, versus $244.52 to $249.16.
The USDA choice cutout Tuesday was down $2.01 per cwt at $266.09 while select was up $1.40 at $252.92. The choice/select spread narrowed to $13.17 from $16.58 with 93 loads of fabricated product and 25 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.65 to $1.80 a bushel over the Mar corn contract. Bids in Kansas were steady at $0.85 over Mar, which settled at $6.79 ¾ a bushel, down $0.04.
The CME Feeder Cattle Index for the seven days ended Monday was $180.42 per cwt, up $0.54. This compares with Tuesday’s Mar contract settlement of $186.15 per cwt, up $2.22.