February 3, 2004



US Cattle Herd Numbers Lowest Since 1959


Cattle herd numbers in United States have fallen to the lowest level since 1959, a U.S. report showed on Friday, with few signs showing that ranchers are rebuilding their herds.

The U.S. Department of Agriculture report of cattle on U.S. ranches, called the Cattle Inventory report, is expected to push cattle futures prices higher in Chicago on Monday.

"Every number (in the report) was slightly at the low end of the range," said Jim Clarkson, livestock analyst with A&A Trading Inc.

The semiannual report put the total U.S. cattle supply at 94.882 million head as of Jan. 1, 2004, the lowest level since Jan. 1, 1959, when there were only 93.322 million head.

This is 99 percent of last year's 96.100 million head, near the low end of analysts' expectations that ranged from 94.7 million to 95.8 million head.

The 2003 calf crop was the lowest since 1951, when there were 35.825 million head. This helped push the number of feeder cattle available for placement on feedlots down about 5 percent, a 1.3 million to 1.5 million head reduction in feeder supplies outside of feedyards, the analysts said.

The discovery of a case of mad cow disease in Washington state in late December came too late in the year to have any effect on this report, the analysts pointed out.

Deferred Chicago Mercantile Exchange live cattle futures and most feeder cattle contracts were expected to trade higher on Monday, the first trading session following the report.

Analysts expect deferred months of live cattle futures to open 0.250 to 0.500 cent higher Monday while nearby contract months will be influenced by cash markets. Feeder cattle are also seen trading 0.250 to 0.500 cent or more higher.

The number of feeders outside feedyards, where cattle are fattened before going to slaughter, showed that the available feeder supply fell sharply during the year.

The reduction in available feeders was attributed to increased numbers of cattle put on feedlots last year, fewer imported cattle last year, drought conditions and reduced calf production, analysts said.

"The increased feeder cattle imports from Mexico did not fully compensate for the decline in feeder cattle imports from Canada," said Jim Robb with the Livestock Marketing Information Center.

Feeder cattle imports from Canada were halted after the discovery of a single mad cow case there last spring.

He also noted there were fewer feeders available because many were pulled early from wheat pastures to take advantage of high cattle and beef prices, and to ride out a continued drought in the western United States.

In addition, some heifers, which usually are kept for breeding, were sent to market.

USDA put the number of heifers for beef cow replacement at 5.5 million head, 98 percent of last year.

"We placed heifers into feeders as opposed to holding them back for breeding purposes," Robb said.

A new section of the report showed the number of cattle on wheat pastures in the Southwest. This number was down 800,000 head to 78 percent of last year, which shows there will be even fewer cattle available to place on feedlots this year.

"This helps us confirm and understand that we didn't take them (heifers) to wheat pasture in the southern plains -- we went directly into feedlots," Robb said.

Based on the reduced numbers of heifers in the breeding herd and lower calf numbers, there were no signs that the industry is starting to expand the herd. The tight cattle supply situation should continue for a few more years, the analysts said.

"Any real expansion in terms of overall productivity, or beef production from the number of head slaughtered, is still several years down the road," Robb added.

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