With the USDA cancelling its regularly scheduled July cattle inventory report due to budget cuts, a question that many would like to have answered is: “How big is the U.S. cattle herd?’
Fortunately, historical relationships between changes in prior and subsequent inventories and levels of cow slaughter in between or heifers’ share of cattle on feed offer some indication, economists said.
These negative relationships respectively explain 30 and 50 percent of the variation in changes in cattle inventory from one July to the next.
The share of January cow inventory that is slaughtered by July has dropped from 8.75 percent in 2003 to 7.76 percent in 2004, which suggests a slowing of cow herd liquidation.
However, the current level still corresponds to a reduction in the July over July total inventory, as does the proportion of feedlot cattle that are heifers, currently at 39.6 percent compared to 39.9 percent last July.
A model incorporating both variables explains 61 percent of inventory changes and estimates the July 1 U.S. cattle inventory to be 94.2 million head or 1.2 percent lower than in July 2023.
Hence, it appears the U.S. cattle industry overall remains in a contractionary phase, even if there may be regional pockets of expansion.
The USDA’s most recent Cattle on Feed report indicates that feedlots placed 1.56 million head on-feed and marketed 1.79 million during June or about 7 percent fewer placements and 9 percent fewer marketings than in the prior June.
Total number of cattle on feed July 1, at 11.3 million head, is just about 1 percent more than last July.
There has been an 0.8 percent increase in steers on-feed relative to last July and a nearly unchanged (0.1 percent increase) number of heifers.
The latter’s share of cattle on feed remains similar to a year ago at nearly 40 percent, as compared to only 32 percent during much of the last expansion.
Such a statistic typically indicates a reduction in replacement heifers, as producers remain reluctant to rebuild the breeding herd.
Given the low inventory and cattle on feed numbers, beef production is anticipated to be 1.1 percent lower in 2024 than last year and then drop another 4.5 percent in 2025.
Accordingly, per capita beef consumption is expected to remain near 58 pounds per person in 2024 and then decrease 3.26 percent to 56.3 pounds per person in 2025.
Based on stronger than anticipated global demand, the USDA in its Livestock, Dairy, and Poultry Outlook revised projections of beef exports upward, now just 4.3 percent lower this year than the last. There is a further 14 percent projected decline for 2025.
Following records in 2021 and again in 2022, beef exports dropped about 14.3 percent lower in 2023.
The 2024 projection returns to within 1.5 percent of the 2020 level, while projected declines for 2025 bring beef exports down to levels not seen since 2016.
Still, as a result of currently strong demand and declining production, cold stocks of beef are already fairly low. According to the USDA’s June Cold Storage Report beef stocks on May 31 are down 3.4 percent from a month earlier and 0.5 percent from last year.
All things considered, prices are likely to remain above year ago levels.
Quarterly prices for slaughter steers are forecast to average about $191.48 per hundred and $199 a hundred for the last two quarters of 2024, and $204.60 a hundred and $209.12 a hundred for the first two quarters of 2025.
For 600–700-pound feeder steers, prices are forecast to average about $286.38 and $277.88 for the last two quarters of 2024, and $293.31 and $301.50 for the first two quarters of 2025.
These projections reflect tight supplies and declining but resilient domestic consumption and export demand.
If demand declines even more than anticipated or a larger herd exists than indicated by this analysis, then lower prices may result.
+++30+++