Mid-Year Cattle Inventory Report Shows Continued Herd Expansion

 

USDA released their mid-year cattle inventory estimates in late July. The report suggested continued expansion of the beef cow herd at a slightly greater pace than was seen in January. The combination of favorable weather and strong calf prices are continuing to keep cows in production and encourage heifer retention. Beef cow numbers were estimated to be up 2.5% from last July and heifer retention was estimated up by about 6.5%. July 1 inventory estimates for 2014 and 2015 can be found in the report linked here.

 

As always, I like to point out a few things when thinking about these inventory reports. First, I think it is worth noting the magnitude of the change in beef cow numbers. We are starting to see the herd grow though heifer retention, but are also seeing growth because cow slaughter has been very low for nearly two years now. A 2.5% increase may not seem that large to many people, however it is worth noting that we have not seen a year-over-year increase of that magnitude since the early 1990's. So, the cow herd is growing at a pace beyond what we have seen in recent history.

 

I also like to put heifer retention in perspective as it relates to the size of the US cow herd. The 6.5% increase in heifer development represents an additional 300,000 heifers, which is about 1% of the US cow herd. Another way to put heifer retention in perspective is to consider it as a percentage of the total US beef herd. This measure typically ranges from 13%-17% in the July report. For 2015, heifer retention as a percent of the beef cow herd is roughly 16%, which is very close to where it was 1992-1994 when we were seeing expansion rates similar to what we are seeing now. That cattle cycle, which ran from 1990-2004, saw five years of herd expansion. Unless something drastic changes between now and the end of the year, 2015 will be the second year of expansion in this cattle cycle. I would expect this expansion to continue for several years unless something drastically changes with the cattle market or weather challenges once again become a factor.