USDA released their annual cattle inventory estimates in late January. This report was especially significant this year as many were looking for confirmation that beef herd expansion had begun. Overall, the report indicated that expansion was underway, and perhaps at a faster pace than many expected. Also, the report confirmed that the cow herd was larger coming into 2015, likely as a result of decreased cow slaughter during 2014. Total cattle and calves were estimated up by about 1% from 2014. Estimates are shown in the table at the end of this article and include both 2014 and 2015.
The number that will likely have the most immediate impact on beef producers is the estimated size of the beef cow herd. The January 2015 estimate was just under 29.7 million, which was an increase of a little more than 2% from 2014. Sizeable increases were seen in Texas, Oklahoma and Kansas. Increases in herd size in the southeast were more moderate for the most part. Cow slaughter had been running well below year ago levels for virtually all of 2014 and I think this was the primary driver of the increase in cow numbers. Deep culling in much of the US during 2011-2013 resulted in beef producers coming into 2014 with a younger cow herd. The combination of a younger herd, favorable weather, and attractive calf prices likely resulted in producers simply culling fewer cows in 2014. The impact will be a larger calf crop being marketed in the US for 2015, which will have an impact on calf prices this fall.
The other number that has gotten a lot of attention was a 4% increase in the number of heifers held for beef cow replacement. Heifer retention was also slightly above year ago levels last year, but by a smaller percentage. Further, I felt that some of the increase in heifer retention last year was partially in response to deceasing cow numbers. Conversely, the heifer retention seen this year occurred when total beef cow numbers had actually increased. To put this 4% in perspective, it amounts to an additional 226,000 more heifers being held for beef cow replacements. As a percentage of the 29.7 million US beef cow herd, this would be slightly less than 1%. Heifer development estimates for July will also be of importance as we start thinking about how quickly this cow-herd will grow. Of course, so will weather conditions in the coming years and how well the calf market holds as production starts to increase and the beef market sees increased pressure from competing meats.
The Kentucky numbers told a story similar to what most would have expected - the Kentucky beef cow herd has grown, but at a more moderate pace than the Southern Plains. The estimated size of Kentucky's beef cow herd came in 2% higher than January 2014, but that was after a 2% reduction in the 2014 estimate. So, the Kentucky beef cow herd is about where it was estimated to be last year - just over one million cows.
While this report confirms that beef cow herd expansion is underway, many of the fundamentals remain positive for the beef sector in 2015. I fully expect calf prices to respond positively to grass this spring and think we are likely to see the strongest spring calf market that we have seen. While I do look for fall calf prices to be softer in fall 2015, I also fully expect the fall 2015 market to another strong one, second only to the fall of 2014. Cow-calf operators should take advantage of the increased income they enjoyed in 2014 and are likely to enjoy in 2015 to get their beef herds where they want them to be in the next few years.
USDA January 1, 2014 Cattle Inventory Report
|2014 (1,000 hd)||2015 (1,000 hd)||2015 as % of 2014|
|Total Cattle and Calves||88,526.0||89,800.0||101|
|Cows and Heifers That Have Calved||38,293.0||39,000.0||102|
|Heifers 500 Pounds and Over||18,969.4||19,240.2||101|
|For Beef Cow Replacement||5,551.3||5,777.4||104|
|For Milk Cow Replacement||4,548.7||4,615.4||101|
|Steers 500 Pounds and Over||15,667.9||15,778.5||101|
|Bulls 500 Pounds and Over||2,037.8||2,104.4||103|
|Calves Under 500 Pounds||13,557.9||13,676.9||101|
|Cattle on Feed||13,018.3||13,093.0||101|
Source: NASS, USDA