Economic and Policy Update

Page 1

University of Kentucky Department of Agricultural Economics

Economic & Policy Update Volume 15, Issue 08

Edited by: Will Snell & Phyllis Mattox

August 26, 2015

Mid-year Cattle Inventory Report Shows Continued Herd Expansion

Featured Articles: Mid-Year Cattle Inventory Report Shows Continued Herd Expansion - Kenny Burdine

New Monthly Newsletter Available: Crops Marketing & Management Update -

- Todd Davis

Picking Apples from the Grazing Tree – Part II - Greg Halich

Retirement Options for Farmers without Employees - Amanda Jenkins

Dr. Jordan M. Shockley Joins the UK Dept. of Ag. Economics

USDA released their mid-year cattle inventory estimates in late July. The report showed 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 mature 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 Table 1.

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Table 1: USDA July 1, 2015 Cattle Inventory Report 2014 2015 (1,000 hd) (1,000 hd) 96,300 98,400 Total Cattle and Calves

2015 as % of 2014 102

Cows and Heifers That Have Calved Beef Cows Milk Cows

39,000 29,750 9,250

39,800 30,500 9,300

102 103 101

Heifers 500 Pounds and Over For Beef Cow Replacement For Milk Cow Replacement Other Heifers

15,600 4,600 4,100 6,900

15,900 4,900 4,200 6,800

102 107 102 99

Steers 500 Pounds and Over Bulls 500 Pounds and Over Calves Under 500 Pounds

13,700 1,900 26,100

14,100 1,900 26,700

103 100 102

Cattle on Feed Calf Crop

11,900 33,900

12,100 34,300

102 101

Source: NASS, USDA

I think it is worth making note of the magnitude of the change in beef cow numbers that were seen in this report. Three years of severe drought from 2011-2013 (particularly in the Southern Plains) resulted in both a reduction in cow numbers and a reduction in the overall age of the cowherd. As weather has improved and calf prices have remained strong, we have seen a major decrease in cow slaughter since 2013. At the same time, we are also seeing the herd grow though heifer retention and both factors are leading to increased cow numbers at the national level. 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 often like to consider heifer retention as it relates to the size of the US cow herd. The 6.5% increase in beef heifer development represents an additional 300,000 heifers this year, which is equivalent to 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. University of Kentucky Department of Agricultural Economics: Economic & Policy View all issues online at http://www.uky.edu/Ag/AgEcon/extbluesheet.php


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