The numbers are in on the cattle herd. It’s stopped growing and set to contract for the next few years. In addition, there are fewer calves on the horizon, likely due to the losses this winter.
On Friday, July 19, the USDA National Agricultural Statistics Service released its biannual Cattle inventory report. The report showed the nation’s cattle herd—beef and dairy cattle, including calves—stood at 103 million head on July 1. This was unchanged from the same time last year. Despite this overall stagnation, the breakdown of cattle types did change.
Of greatest interest was in the beef female numbers—numbers which indicate the cattle cycle has crested.
Beef cow populations were unchanged at 32.4 million head. This was not a surprise.
The population of heifers 500 lbs. and over held for beef cow replacement stood at 4.4 million head, down 4.3 percent compared to the same time last year. This was lower than average pre-report industry estimates and has implications for the future.
Katelyn McCullock, director of the Livestock Marketing Information Center, said the decline in beef replacement heifers means producers are not looking to expand.
“What we see that as is that Jan. 1, 2020 could absolutely show a year-over-year decline in the total number of beef cows that you have, which we didn’t see in July 1 this year, but it does seem that we are cresting in the cattle cycle,” she told WLJ.
“And, moving forward, the volume of heifers suggest that we probably will enter into the contractionary phase at some point, whether it’s before Jan. 1 or after. But we’re looking at that transition phase happening as we speak.”
The cattle cycle—the growth and contraction of the nation’s cattle herd in response to market fundamentals of price and demand—generally runs about 10 years. Assuming the current cattle cycle began in 2014 when prices were high and herd growth began in earnest, we are right in the midpoint of a usual cycle. Despite that, this cattle cycle might be a bit different.
“What we’re seeing in this cattle cycle, or what we’re predicting, is that the inventory changes moving out of this is probably going to be more subtle than it has been in some other cattle cycles,” McCullock explained. She went on, saying that we could see cattle inventories more or less stabilize to slightly decline moving forward following this crest.
“The reason we’re predicting that is we’re not expecting prices to have the significant decline that would cause a rapid liquidation,” McCullock continued. She projected a possible situation where the inventory plateaus or fades out at a slower rate than it normally does.
“The next year should tell us a lot of what to expect from that transition phase, and we could end up having it behave more normally, but right now we’re really thinking that, the way prices are looking today, it’s going to be a much softer transition.”
In addition to the potential plateau or softer landing on the contraction phase of the cycle, McCullock highlighted potentials on the horizon for a shortened contraction.
Calves and calf loss
While the inventory report showed increases in likely slaughter cattle—“other heifers” up 5 percent and steers over 500 lbs. up 1 percent—it showed a 1 percent decline in calves under 500 lbs. and the projected calf crop.
“This combined with steer slaughter below a year ago, fewer steers on feed, elevated cow and heifer slaughter indicate that the data is supporting a lot of anecdotal stories over the last couple of years of reproductive problems,” observed David Anderson, professor and economist at Texas A&M AgriLife Extension.
“Reports of reproductive problems have often been attributed to extreme weather events, but also some uncertain factors. This combination of data might also suggest that the calf crop or maybe even the cow herd has been slightly overestimated the last couple of years.”
The population of steers over 500 lbs. was estimated at 14.7 million head, “other heifers” over 500 lbs. at 7.9 million head, calves under 500 lbs. at 28.1 million head, and the calf crop overall at 36.3 million head. — Kerry Halladay, WLJ editor