May 20, 2004

US Cattle Inventories Continue to Decline

USDA, in their latest Livestock, Dairy and Poultry Outlook, said while much uncertainty exists as to the number of heifers that will be retained for breeding over the next couple of years, present numbers suggest very tight supplies for 2004.

"The number of beef replacement heifers and beef heifers expected to calve in 2004 were both down 2 percent from a year earlier on January 1," they note. "Dairy replacement heifers were down 2 percent, but the number of dairy heifers expected to calve this year was down 4 percent. Heifers on feed in feedlots with over 1,000 head of capacity on April 1 were up 4 percent from a year ago. Overall both the number of heifers bred or available for breeding in 2004 are down, and any meaningful increase in heifer retention cannot begin until heifers from this year¡¯s calf crop are weaned this fall."

USDA says even if larger numbers are retained, these heifers will not be bred until 2005 to calve in 2006. If a larger proportion of the calves weaned in the fall of 2006 were placed on feed, beef production would not begin to rise until mid-2007, and then from progressively lower production levels in 2004 through 2006 due to declining inventories.

USDA also said they expect declining feeder cattle supplies. Feeder cattle supplies outside feedlots on April 1 and available for grazing or feeding enterprises were down nearly 2 percent from a year earlier. "The smallest calf crop since 1951 and strong demand for feeder cattle continues to pull down feeder cattle supplies outside feedlots," they add.

"With steadily reduced calf slaughter as more dairy bull calves are priced away from bob veal slaughter and into feedlots, little flexibility exists to adjust the domestic inventory to increase supplies. In fact, increased heifer retention will make the situation even tighter over the next couple of years. The situation was made even tighter with the ban on imports of cattle from Canada in May 2003," they add.

"Strong stocker/feeder cattle prices are resulting in larger imports from Mexico, but their cattle inventory has also been declining, and availability of animals for additional imports is limited," they add.

Source: USDA