US beef cattle herd decline could have bottomed out says USDA expert
Dr Kenneth H Mathews, senior cross-commodity analyst for the animal proteins cluster at USDA’s economic research service, was commenting in a USDA report that the inventory of all cattle and calves in the US in 2013 was 87.7 million head, down 1.8% from one year ago. This was the continuation of an eight-year decline and represented the smallest total US cattle herd since 1951.
However, Dr Mathews said USDA’s 10-year projections showed the total cow inventory (beef and dairy) in the US would bottom out this year and then increase "modestly but steadily" until at least 2021. The reason for the present low inventories was the drought that had persisted for several years, he said.
"Since 1996, we’ve only had two years that showed cattle inventory increases. As a result, cattle producers are probably going to try to take advantage of the year that changes and everybody is hoping this year will be that year," he said.
"If it is, then they will start retaining heifers for rebuilding the breeding herd and that will reduce the supply of feeder heifers going into feed lots. That will reduce the supply of feeder cattle for the next two or three years and, as a result, beef production is likely to be no higher than it has been in the last year, perhaps even lower," said Dr Mathews.
Janet M Riley, senior vice-president of the American Meat Institute (AMI), which represents companies that handle 95% and 70% of US red meat and turkey processing respectively, explained the reason for the decline in the herd: "We’ve had a major drought and that has cut the corn crop, which is a major component of cattle feed."
Another factor was the US government policy to use ethanol in gasoline. Ethanol was derived from corn "and we’ve been competing with gasoline producers for corn leading to record high corn prices in recent years," she said. When the cost inputs were going up "then we see more cattle going to slaughter," she added.
Asked whether these factors would continue, she told GlobalMeatNews: "We’re seeing some easing, and corn prices have come down a bit, but I cannot give any long-term forecasts."
