August 3, 2009

The US cattle herd continues to shrink, with the USDA reporting a 1.5 million head decrease in the inventory for the third consecutive year, to 101.8 million head as at July 1, 2009.

This is the smallest July US cattle inventory since records commenced in 1973.

The report indicated that beef supplies will remain tight. Analysts expect supply to remain tight into 2011, as the 2009 calf crop fell 1.4 percent to 35.6 million head and the pre-report estimates expected only a 1.2-percent decline.

US beef cow herd figures as of July 1, 2009, declined 450,000 head to 32.3 million head, indicating ongoing herd liquidation despite significantly lower beef cow slaughter numbers so far this year.

Dry conditions over the past year, particularly within the Texan region, has led to the continued decline in the US beef cow herd, while higher production costs and weaker beef demand this year have caused losses for cattle backgrounders as feeder cattle prices have declined.

Heifers for beef cow replacements dropped two percent on-year to 4.5 million head. Pasture conditions across some regions have recently improved and feed costs have dropped, which could lower beef cow slaughter, as these factors provide incentive for US producers to retain their breeding herd.

The number of heifers for dairy cow replacement remained unchanged at 3.9 million head, despite significant losses experienced within the dairy industry.

However, dairy cow herd numbers dropped two percent to 9.2 million head, with liquidation expected to continue for the rest of 2009, with another dairy herd retirement round set to occur over the next couple of months.