US Cattle Inventory Seen Larger

The USDA’s semi-annual cattle inventory report is due Friday and is expected to show modest growth in the US cattle herd.

Total cow slaughter last year was down 862,952 head, or 13.85%, to 5.366 million from 6.229 million, USDA figures show.

The divergence began in early April as rain freshened pastures, after years of drought, trade sources said.  Prices for slaughter-ready cattle also rose to record heights last year, prompting more demand for replacements to fill feed yard pens and raising prices for feeder cattle.

A graph from the Livestock Marketing Information Center illustrates the divergence.

Heifer slaughter last year also was down from 2013 and the previous five-year average, but a point of pulling away is not as visible.  Weekly statistics add up to 8.364 million head slaughtered, down 717,680, or 7.90%, from 9.081 million the previous year.

Some market analysts also expect the USDA to make some modest upward revisions to 2014 statistics, which figure into their own estimates for Friday’s report.

The USDA’s National Agricultural Statistics Service’s revised estimates for 2009 to 2013 cattle inventory showed a slower rate of liquidation for these years, making it easier to forecast a lift in USDA herd inventory in this report.

 

2015 CALF CROP SEEN HIGHER

 

As the number of breeding females in the US cattle herd begins to rise, so too do the expectations for the number of calves born in 2015.  Some would even predict a loosening of feeder cattle supplies this year and a rise in fed cattle slaughter beginning this year.

Total cattle slaughter last year was down 7.08% from 2013 to 29.684 million head from 31.947 million in 2013.  Part of this was the reduced cow slaughter, but steer and heifer slaughter also declined.

Gains in steer and heifer slaughter are expected this year, although most place the likelihood of any sustainable increases in the last half of the year, at the earliest.  It takes about two years for calves to reach maturity, and calves born this year wouldn’t be ready for slaughter until next year.

With even a steady annual 2015 slaughter rate, the US is on track to produce more beef this year.  USDA figures show 2014 commercial beef production at 24.252 billion pounds, down 6% from 25.720 billion in 2013.

The difference between a 7% decline in slaughter and a 6% decline in beef production can be explained in heavier slaughter cattle weights.  USDA slaughter data show that average live weights for commercial cattle slaughter last year was 1,363 pounds, up 2.17% from 1,334 pounds in 2013.

 

CASH CATTLE MARKETS UNTRADED

 

Plains cattle markets have yet to trade this week.  Feedlot asking prices were around $162 per cwt on a live basis and $260 on a dressed basis.  Cattle traded last week from $158 to $160 live and $256 to $257 dressed.

Cattle feeders are holding tough on prices, feeding cattle to heavier weights, as they try to wring a few more dollars out of each animal sold for slaughter.

The CME Feeder Cattle Index closed at $215.25 through Tuesday, down $0.11.  The Index continues to hold a significant premium to the Jan futures contract, which expires Thursday and settled Wednesday at $212.45, up $1.67.