MID-YEAR  CATTLE  INVENTORY

As noted above, USDA also released the mid-year Cattle inventory report which further confirmed expectations that cattle numbers overall have continued to decline due to a number factors, particularly increases in overall production costs, lingering impacts of drought over recent years and lower calf prices.  Looking ahead, tighter supplies of available cattle should be supportive of fed cattle prices.  Still, economic conditions for cow-calf operations and high feedstuff costs suggest further U.S. beef cowherd liquidation will occur.

According to the report, the U.S. cattle herd at 104.3 million head was slightly less than last years but one percent smaller than 2005’s.  Of note, the number of beef cows at 33.2 million head was one percent or 200 thousand head below the prior year.  Importantly, the number of beef heifers held as replacements was down 2 percent with expectations that the number of replacements will decline further as the year progresses.  As expected, the U.S. dairy cowherd has increased, being 1 percent larger than a year ago.  Compared to last year, the calf crop is expected to be down slightly (around 100 thousand head). 

Given record corn prices and higher costs of gains, many calves have been put out on pasture rather than placed in feedlots.  Therefore, as of July 1 the calculated number of feeder cattle supply outside of feedlots was up just over 250,000 head from a year ago.  Most of those animals will flow into feedlots yet this calendar year.