Weekly Outlook: Has Cattle Herd Expansion Ground to a Halt?


By James Mintert, Successful Farming

Agriculture.com - 2/5/2019


Normally, at this time of year, the cattle industry focuses on information contained in the USDA’s January 1 estimates of the U.S. cattle herd. The inventory report provides a wealth of information to market participants including estimates of the all cattle and calves inventory, and both the beef and dairy cow inventories as well as an estimate of the prior year’s calf crop. This year, however, USDA extended the data collection period because of the government shutdown and the inventory estimates will be provided as of January 31, instead of January 1, with the report scheduled for release on February 28. As a result, we’re left to speculate regarding what information the report might contain.


U.S. cow-calf producers have been expanding the size of their herds since 2014, when the all cattle and calves inventory bottomed out at 88.5 million head. A year ago the all cattle and calves inventory stood at 94.4 million head, nearly 7% larger than four years earlier. So, what happened to the size of the herd in 2018? Did U.S. producers continue to increase their herds in 2018 or did expansion grind to a halt?


One of the best long-term indicators regarding the expansion or contraction of the cattle herd is the ratio of female slaughter (cows and heifers) to steer slaughter. During expansionary phases female slaughter declines relative to steer slaughter as producers hold back females to expand their herds. When expansion starts to slow or producers shift into herd liquidation, female slaughter increases relative to that of steers. Let’s take a look at the recent data to see if it conforms to this pattern.


In 2013, the most recent year of herd liquidation, female slaughter as a percent of steer slaughter was relatively high at 96%. When expansion got under way, female slaughter began falling, declining to 89% in 2014. Female slaughter fell even more sharply the next two years as herd expansion accelerated. For example, in 2015 the ratio was 82% and in 2016 the ratio was 80%. The first sign that the industry’s expansion phase was slowing down appeared in 2017 when the ratio of females to steers in the slaughter mix rose to 86%. What was the ratio in 2018? Based upon USDA’s weekly slaughter estimates, female slaughter as a percentage of steer slaughter rose to about 92% during 2018. The implication is that expansion during 2018 did indeed come to a halt, but it does not look like the industry shifted into a liquidation phase. Instead, the odds appear to be quite high that the size of the nation’s cattle herd remained essentially unchanged during 2018. What does that mean for future beef supplies and prices?


Commercial beef production in the U.S. during 2018 totaled 26.9 billion pounds, about 2.6% more than a year earlier. But per capita beef supplies at 57 pounds were virtually unchanged from 2017...