The USDA’s July 1 Cattle on Feed Report showed the lowest number of U.S. beef cattle in a decade. Scott Brown, Associate Professor of Agricultural Economics with the University of Missouri, says this is the smallest beef herd in quite some time.
He says, “Absolutely, you know, we fell below the lower level that we saw back in 2014. Some of the lowest we’ve seen in terms of a July 1 estimate. USDA hasn’t given us July 1 inventory as far back as January 1, but it’s the lowest that we’ve probably seen since the 1960s.”
He expected the lower trend to continue heading into the report. “I could hear a mixed bag of information before the release. I think you had some states where maybe pastures were getting in better shape than they’ve been for the last couple of years. You can hear some interest in trying to grow the herd in those states. It seemed like other states that were still awfully dry, I think, those states were definitely going to be lower.”
While the smaller numbers have meant higher beef prices, that doesn’t mean higher profitability for producers. Brown says, “Profitability, all right, so we’re talking about, in some cases record cattle prices today, but we’re not talking about record profitability. The cost side of the equation has been high, and I think that kept a lot of folks at bay from expanding the cow herd. The rest of the data we have from USDA also points to nothing that to me would suggest any kind of expansion.”
There were no signs in the latest report that cattle producers had begun adding to their herds. Brown says, “We got cattle on feed last Friday, as well and 40 percent of July 1 on feed were heifers. That’s not an expansion number. In 2014 and 2015, we were down around 31 percent of the on-feed inventory with heifers, so we’re not growing. None of that data suggested we are growing the herd, and I think we just got out of the July one report that information back of further declines.”
The numbers showed beef cattle at 29.4 million as of July 1, three percent lower than last year.