Trends . . . MID-YEAR CATTLE INVENTORY BELOW A YEAR AGO

On Friday, July 23^rd, USDA-NASS reported that the mid-year U.S. cattle and calf inventory posted another year-to-year decline as of July 1, 2010. The report further confirmed that cow-calf producers have continued to reduce their herds despite higher calf prices. The decline in cattle numbers is mostly due to a variety of factors including production costs that remain high relative to historical standards, record high cull cow prices, and continued uncertainty in the market. Looking ahead, tighter supplies of available cattle will be supportive to fed and feeder cattle prices in 2010 and 2011. However, the degree to which the economy recovers will be a key factor in domestic beef demand and thus cattle prices over the next year.

USDA reported the U.S. cattle herd at 100.8 million head versus 102 million head last year and more than two percent below 2008’s mid-year inventory. The number of beef cows at 31.7 million head was down two percent or 500 thousand head from last year, while the number of dairy cows was reported at 9.1 million, 100,000 thousand head smaller than a year ago. According to the report, the number of beef heifers held as replacements was over two percent smaller at 4.4 million head which suggests additional reductions in the cowherd are to be expected. USDA estimated the calf crop at 35.4 million head, 419 thousand head less than last year and the smallest since 1950.

A number of calves were held out on pasture before being placed on feed this year as pasture and range conditions were much improved over last year and feed grain costs are still rather high on an historical basis. Thus as of July 1^st, the calculated number of feeder cattle outside feedlots was reported at 37.5 million head, down about three percent from last year.