Cattle Inventories Seen Tighter In Jan. 31 Report

Tighter beef cattle inventories are expected in the Jan. 31 USDA Cattle Inventory report, said Rob Ziegler, Extension specialist, at the University of Wyoming, in a Livestock Marketing Information Center letter called In The Cattle Markets.

Total headcount likely will affect total beef production in years ahead, but the amount of beef produced per cow has increased over time, helping to support beef supplies, Ziegler said, so total beef production should also be considered when evaluating the effect on markets.

The January report will provide headcounts of all major classes of cattle, including heifers kept as replacements, which may indicate producer intentions to rebuild the national cow herd, Ziegler said.

 

OTHER USDA DATA

 

The LMIC compiles and analyses data from USDA-NASS to give an indication of how much beef is produced per beef cow each year, Ziegler said.  From 1999 through 2024, estimates indicate each cow produced about 5.77 more pounds of beef each year.

Feeding margins certainly influenced live cattle out-weights, which affect the amount of beef produced, he said.  Cheap feed grains, favorable weather and strong prices all helped support carcass weights and beef production.

Additional pounds of beef per cow over time likely will be an indication of how technologies improve the efficiency of beef production, Ziegler said.

 

A LOOK BACK

 

Looking back at the bottom of the last cattle cycle in 2014, US cattle inventories were a little more than 88 million head, and commercial beef production was just over 24 billion pounds, he said.  According to the January 2024 inventory report, total cattle inventories were a little more than 87 million head and commercial beef production approached 27 billion pounds for 2024.

That means last year the industry produced about 3 billion more pounds of beef with 1 million less cattle, Ziegler said.  The ratio of pounds produced compared to total cattle inventories has risen nearly 11% since the last cattle cycle.

But there is a lag effect between cattle inventories and beef production, he said.  Cattle inventories bottomed in 2014, but the realized effect on beef production was felt later in 2015 when retail beef prices peaked at $6.29 a pound.

Choice retail beef in 2024 averaged $8.24 a pound, Ziegler said.  When adjusted to 2014, the price of retail beef was $6.21 a pound.

The lower price for retail beef in 2024 in real terms can be attributed to increased production, he said.  When heifer retention does occur, feeder cattle supplies will be reduced, and retail prices may peak from reduced beef production.

 

CATTLE, BEEF RECAP

 

The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $201.58 per cwt to $203.44, compared with last week’s range of $199.88 to $208.09 per cwt.  FOB dressed steers, and heifers went for $315.83 per cwt to $321.61, compared with $312.04 to $319.72.

The USDA choice cutout Monday was down $1.11 per cwt at $332.05 while select was up $0.11 at $319.55.  The choice/select spread narrowed to $12.50 from $13.72 with 130 loads of fabricated product and 23 loads of trimmings and grinds sold into the spot market.

The USDA-listed weighted average wholesale price for fresh 90% lean beef was $352.96 per cwt, and 50% beef was $114.42.

The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.20 to $1.35 a bushel over the Mar corn contract, which settled at $4.90, up $0.05 3/4.

The CME Feeder Cattle Index for the seven days ended Monday was $278.02 per cwt, down $0.90.  This compares with Tuesday’s Jan contract settlement of $274.40, up $0.90.