U.S. cattle herd slowing down due to drought

by Editor fleischwirtschaft.com
Monday, July 30, 2007

The United States cattle herd is back in contraction mode as a result of last year's severe drought in the southern plains and this year's drought in the country's southeast and western regions.

On July 1 the U.S. herd totalled 104.8 million head, which was 0.4% (or 400,000 head) lower than a year earlier.

The high cow slaughter witnessed over the past year was reflected in the beef cow inventory of 33.35 million head, down 100,000 head and the smallest July 1 cowherd since 1990.

The rate of decline in the beef cow replacement herd caught analysts by surprise, with numbers down 6% on a year ago, as opposed to pre-report forecasts of just a 2.3% reduction.

According to Meat and Livestock Australia the decline in heifers for beef cow replacement indicates that U.S. beef producers have not only cut short their herd rebuilding efforts but they are truly in the liquidation phase.

The decline also reflects the high feed costs – corn prices have risen 50% in the last 12 months due to ethanol demand – and profit uncertainty facing U.S. cattle producers.

The smaller cow herd and calf crop is expected to constrain growth in U.S. beef production over the next two years. This should be bullish for U.S. domestic beef prices, particularly for lean beef, and should have a flow-on effect to imported beef prices.