TAMPA, Fla. — The U.S. cow herd has shrunk to its smallest level since 1941 at 38.515 million cows.
The beef cow herd totalled 29.295 million, down three percent from 2011 and the smallest since 1962 , according to the U.S. Department of Agriculture’s livestock inventory report.
Drought and high input costs continue to discourage expansion, even though record calf prices provide a signal to rebuild.
“Different areas of the country have gone through liquidation for 15 of the last 17 years. That is a given, but there are some data points where things are starting to look more positive,” Cattlefax market analyst Kevin Good said at the annual Cattlefax presentation at the National Cattlemen’s Beef Association annual meeting held in Tampa Feb. 5-9.
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“The economic incentive is there to expand, and we do expect to see some of that as soon as Mother Nature co-operates.”
Seventy percent of the United States is dried out, but the Pacific Northwest and parts of the northern Plains have received good moisture.
Statistics show more heifers in those regions were being kept at home for breeding.
The biggest liquidation was in the mid and southern Plains, with the biggest hit in Texas. That state has lost one million cows in the last 24 months.
With cattle in short supply, Cattlefax expects record prices.
Fed cattle prices this year are expected to average $126 US per hundred-weight compared to $123 last year, up 2.5 percent. Yearlings are expected to average $155, an increase of five percent from last year’s average of $147.
Good predicted calf prices would average $175 per cwt., up five percent from last year’s $167.
Commercial cows should average $88 per cwt., a 10 percent improvement over last year. Bred cow prices should increase 15 percent and approach $1,600 for those interested in buying cows for expansion.
“The cow-calf sector will remain in the driver’s seat during 2013, particularly if they have feed,” said Good.
Record high prices do not equate with strong profit. Margins in the packing sector reached the lowest levels in five years.
Feedlots are expected to be in the red for most of the year with breakevens of $130-$135 per cwt. because of high input costs.
Cattle have broken the $130 price barrier only once, and feeders will need to achieve at least that to make money early this year.
A declining calf crop is expected to reduce 2013 fed slaughter to 25.4 million head.
Beef and dairy cow slaughter is also down. Cow slaughter was down to five million from a high in 1984 of more than 8.5 million.
The percentage of U.S. heifers slaughter has declined in the last couple years. Nearly 40 percent were killed in the late 1990s.
While fewer cattle are slaughtered, heavier carcass weights have helped ameliorate the decline in beef production.
Weights have increased by six pounds per year for the last 30 years. Feedlots had to carry over cattle for longer periods last year, so steers went to slaughter 18 lb. heavier than the previous year.
The long-term trend indicates weights will increase again this year.
Nevertheless, U.S. beef production will decline by 600 million lb. so retail prices are soaring to ration the short supply, said Cattlefax analyst Mike Murphy.
Pork and poultry supplies are also short and increasing in price.
“That is not only true for beef sector. We are also seeing that hold true for the pork and poultry sector as well,” he said.
Per capita beef supplies this year will be at 56.1 lb., pork will be 44.1 lb. and poultry at 80 lb. That is 3.5 lb. less total meat available than last year. The downward trend has continued since 2006.
