Monday’s big news was the Cattle report from USDA, with the Jan. 1 cattle inventory. Herd contraction was expected, but numbers are less than many expected.
Beef cows of 30.125 million head were 718,500 head fewer (-2.3%) than the same time last year. That is the fewest numbers since 2015 and was the largest year-over-year decline since 1996-97, according to David Anderson, Extension livestock economist at Texas A&M University. He adds the report included a significant revision of 314,000 fewer head in the previous year’s beef cow inventory.
Although drought contributed to the decline in beef cows, Anderson adds calf prices, relative to costs, also has forced some culling.
Beef heifers held for replacement of 5.611 million head were 191,600 head fewer (-3.3%) than the previous year.
“That is the fewest replacement heifers held back since Jan. 1, 2014,” Anderson says, in the latest issue of In the Cattle Markets. “While fewer replacements would be needed with a smaller cow herd, a reduction this large indicates some expectations of more herd contraction.”
The calculated feeder supply outside of feedlots of 25.537 million head was 676,000 head fewer (-2.6%) than last year.
Dairy cows of 9.375 million head were 67,400 head fewer (-0.7%)
All cattle and calves of 91.902 million head were 1.888 million head fewer (-2.0%).
“The inventory report indicates that we are headed towards less beef production and higher prices,” Anderson says. “A cow herd of this size should also lead to some expectations of calf prices approaching the rarified air of the years following the Texas 2010-2012 drought. The current drought and its development over the coming months will dictate a lot about the cow herd over this year. But, good beef demand should also pull prices higher on top of available supplies.”
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Cattle futures closed higher with likely positioning ahead of the aforementioned bullish Cattle report.
Live Cattle futures closed an average of $1.18 higher (88¢ to $1.42).
Feeder Cattle futures closed an average of $2.64 higher ($1.75 to $3.40 higher).
Negotiated cash fed cattle trade was at a standstill through Monday afternoon, according to the Agricultural Marketing Service.
Last week, live prices were at $137/cwt. in the Texas Panhandle, at $136 in Kansas $137 in Nebraska and at $137-$139 in the western Corn Belt. Dressed trade was steady at $218.
Choice Boxed beef cutout value was 2¢ lower Monday afternoon at $290.40/cwt. Select was 14¢ lower at $283.27.
Corn futures closed mixed, from 10¢ lower to 4¢ higher.
Soybean futures closed 13¢ to 20¢ higher through Aug ’23 and then 2 higher to 3¢ lower.