January 31, 2008

US cattle growth bleak on high feed costs

US livestock analysts said any significant expansion in the cattle industry is not apparent this year as corn price hikes impede production growth.

The slow production started in 2005 after the US herd declined to a 30-year low, and slowed further in 2006 due to drought.

Analysts pointed that the slow pace continued last year with dry pastures and high feed costs.

On Friday's semiannual cattle inventory report from the USDA, analysts expect a smaller herd and possibly a 56-year low in calf crop this year.

Dan Vaught, livestock analyst with AG Edwards pointed that high feed costs and weak calf prices will cause many ranchers to cut on their herds. Last year's drought also plagued the Southeast area, sending animals to packing houses as well, Vaught said.

The US cattle herd was estimated at around 96.72 million head as of January 1, 2008, down 0.3 percent from last year's 97 million.

Estimates range from 96.49 million to 96.85 million.

Jim Robb, livestock economist with Livestock Marketing Information Center, said that in 2008, the estimated cow/calf returns over cash costs will turn negative for the first time in several years.

Robb explained that costs of production are up dramatically while calf prices are down largely on higher feed grain prices. He doubts there is any potential to grow the beef cow herd in the next couple of years.