The U.S. Department of Agriculture has released its July 1 cattle inventory report. The report reveals what many industry analysts have predicted  —  a continued downward trend in herd numbers. The biannual survey showed that for the second year in a row total cattle inventory has declined. Numbers are down approximately 500,000 head from a year ago. Current numbers total 104.3 million head, which is down 1 percent from the 105.2 million recorded two years ago.

According to the report, all major classes of cattle except dairy heifer replacements showed a downward trend. The dairy cow herd continued to show an increase of 100,000 more cows than the same time last year in spite of record-high feed prices.

The beef cow herd, on the other hand, continues to decline. Producers continue to cull breeding cows, primarily due to drought conditions and rising feed costs. Strong slaughter-cow prices have also supported higher than average culling rates. Industry analysts have noted how consumer demand for ground beef has created added support for cull-cow prices. The declining value of the U.S. dollar has also made cull cows more attractive for ground beef production versus the higher cost of imported trim. Culling rates are predicted to remain similar through the end of 2008, which means a further decrease in the U.S. beef herd.

The other strong signal related to total cow numbers revolves around the continued lack of heifer retention. According to USDA, beef replacement heifers were down to 4.6 million head, a reduction of 2 percent. This dynamic has also largely been influenced by limited feed resources.

The cattle inventory report also revealed that the 2008 calf crop is expected to be 37.3 million head, down slightly from 2007 and 1 percent below 2006. Calves born during the first half of the year are estimated at 27.1 million, down slightly from 2007 and 1 percent below 2006.

July Prices

The Drovers’ auction market survey reports that bred-female prices decreased $40, ending July at $742.50 per head. Aged, bred-cow prices increased more than $4 per head to close out the month at $648.13. While marketings were light in the auction markets surveyed, bred-heifer prices increased $67.50; however, they are still down significantly from the $1,020 values recorded a year ago.

Young and middle-aged open females continued their slightly upward trend from last month, ending July at $65.75, a $1.38 increase over last month’s figures. Prices for aged cows increased $2.47, ending the month at $52.51 per hundredweight. Heiferettes were also up slightly, ending the month at $65.80, which was an increase of $1.45 compared to the previous month.

Large pairs showed more strength than last month and increased $53.50 to end July at $1,065. Small pairs regressed $112.42 to $904.58 by month’s end. Small or aged cows with calves also decreased $130.50 and closed the month of July at $750.84.

Prices for canner and cutter cows continued an up-ward trend from last month and increased $3.18 per hundredweight during July, closing out at $49.52. Utility and commercial cow prices were also up $1.21 and ended the month of July at an average of $58.17.