July 27, 2004

US Cattle Numbers Continue To Fall, Prices Climb

US cattle numbers continue to drop. Mid-year inventories were estimated by the USDA Friday at 94.9 million, the lowest level since July 1 data were started in 1973.

However, expansion of the beef herd may be beginning as beef heifer retention is up, especially in Plains states recovering from years of drought, according to Chris Hurt, Purdue University Extension economist. Prices of calves and feeder cattle are expected to be at record highs with strong live cattle futures and moderate grain and forage costs, he says.

Hurt projects that prices for finished steers will strengthen this fall and will average in the very high $80s to the low $90s. He says seasonal highs could be reached in late winter/early spring and approach the low to mid-$90s.

For the second quarter of 2005, Hurt expects to see prices in the mid-to- higher $80s.

"Cow-calf producers will reap the highest returns of all this fall as high live cattle futures prices are complemented by a tiny calf crop (nearly 1% smaller than last year's crop) and by the potential retention of additional heifers," he says.