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Cattle Inventory Updates

Thursday, March 28, 2019 - 7:00am

Amy: Today, we’re talking about cattle inventory and the implications for cattle markets. Hello, I’m Amy Myers, and welcome to Farm & Family. Today, we’re speaking with Dr. Josh Maples, Mississippi State University Extension Economist.

Dr. Maples, what is the update on cattle inventory?

Josh: Hi Amy, the January 1 USDA Cattle report was released two weeks ago and is the most comprehensive inventory report for state-by-state inventories. It provides the best snapshot of the beef cattle industry over time. It allows us to better understand what is going on at a national level for supplies as well as here in Mississippi.

Amy: Let’s look at the national level first. What stood out there?

Josh: The report showed an estimated 0.5 percent growth in all cattle and calves for a total of 94.8 million head in the U.S. on January 1, 2019. This report was mostly the expected mix of slight growth and hints of lower growth in the future. A larger calf crop in 2018 implies beef production will again be higher in 2019 and likely into 2020 but the cow and heifer numbers point toward smaller increases in calf crops in the future.

Amy: How about the number of calves born last year, was it larger?

Josh: It was larger. The U.S. calf crop estimate of 36.4 million head showed 644,500 (1.8%) more calves were born in 2018 than in 2017which was about a 2 percent increase. This was the fourth consecutive year of calf crop increases.

Amy: You also mentioned cow and heifer numbers, what is the story there?

Josh: The inventory of beef cows was 31.8 million head which was up about one percent. However, the number of beef replacement heifers was down 3 percent from January 1, 2018 at 5.9 million head. This left beef replacement heifers at 18.7 percent of the total beef cow herd which is the lowest level since 2013, but still above herd contraction levels. Only 4 of the top 25 states showed year-over-year increases in the number of heifers for beef replacement. It is likely that we are near the end of the herd growth phase of the cattle cycle though it is worth noting there is not yet clear evidence of entering a contraction phase as calf prices remain at profitable levels. A shift higher in prices could push more expansion while lower prices in 2019 could lead to contraction.

Amy: Let’s shift to Mississippi specifically, how many cows and how do we rank?

Josh: Mississippi ranks 26th for the number of beef cows that have calved at 477,000. This was down 24,000 head from a year ago and had the largest percentage year-over-year decrease of any state with more than 15,000 beef cows. That sounds bad until you consider that the 2018 report showed Mississippi had one of the largest percentage increases when compared to 2017. If you consider all cows and calves, the total is 900,000 head in Mississippi.

Amy: Mississippi saw one of the largest decreases in beef cow herd, is that a trend?

Josh: I really don’t think so. I suspect some sampling error comes into play here which is not unusual. I don’t see much evidence for a 5 percent growth during 2017 followed by a 5 percent contraction in 2018. Over the past 12 years, the lowest Mississippi beef cow inventory year was 468,000 in 2015. The highest inventory total was 503,000 in 2010. That is only 35,000 head apart. Looking at the longer trend, steady is the term to use for Mississippi beef cow numbers.

Amy: So what is the primary takeaway from this new information?

Josh: These inventory responses generally align with market performance over the past two years: prices have been strong enough for nearly flat or slow expansion but not high enough for the rapid expansion seen just a few years ago. We are not yet talking about herd contraction, but we are unlikely to see large calf crop increases the next few years without a large and sustained price rally. Looking ahead, the lack of continued large supply increases should take some pressure off of calf prices in the coming years.

Amy: Thanks so much. Today, we’ve been speaking with Extension Economist Josh Maples. I’m Amy Myers, and this has been Farm & Family. Have a great day!

Department: Agricultural Economics

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