According to yesterday’s released U.S. Department of Agriculture report, all cattle and calves are down 3 percent from last year — the lowest level since 1962. The total U.S. inventory is currently 89.3 million head as compared to January 2022 numbers of 92.1 million head.
Severe droughts across the Western United States coupled with increasing feed costs have led to dispersals and herd shrinkage with 3 percent fewer cows and heifers producing calves this year. The trend in fewer calves being born will likely continue with beef cows at 4 percent and heifer supplies at 6 percent below last year’s numbers.
Farmers are also facing challenges such as record percent increases in cash receipts across many agricultural sectors, meanwhile, interest rates for operating loans will likely be double or triple what they’ve been in previous years.
Cattle numbers heading to processing will undoubtedly be lower in the near future. Steers weighing over 500 pounds and calves under 500 pounds are down 3 percent, while total cattle on feed is down 4 percent.
“We’re going to be dealing with some sharp beef-supply declines for the next three years straight and therefore higher beef prices,” Rich Nelson, chief strategist for commodity broker Allendale told Reuters. “There will be no help in the coming years for the consumer.”
A decline in beef cattle inventory isn’t all that’s being seen. Milk replacement heifers were also down 2 percent from the previous year.
These numbers are in line with CattleFax’s predictions of a downward spiral of 5 percent in 2023. The predicted 5 percent drop would mean that inventory would hit the lowest point since 1951 — the last time the cattle inventory declined by 3 percent or more was in 1987.
Since November 2022, beef prices have been elevated — tight supplies and consumer demand will likely hold beef prices. Meanwhile, Rabobank has indicated that the U.S. herd will likely not begin to rebuild until at least 2025.