Cattle inventory report signals slowing herd expansion.

Krissa Welshans 1, Feedstuffs Editor

July 20, 2018

2 Min Read
Cattle in Nebraska feedlot
CAPACITY CONSTRAINTS: Expanding beef processing capacity today may be fixing yesterday's problem as cattle cycle turns to lower production. DarcyMaulsby/iStock/Thinkstock.

The U.S. Department of Agriculture’s July “Cattle on Feed” report showed that cattle and calves on feed for the slaughter market in the U.S. for feedlots with capacity of 1,000 head or more totaled 11.3 million head on July 1, 2018, a 4% increase from July 2017. The average analyst estimate was also for a 4% increase. USDA said it is the highest July 1 inventory since the series began in 1996.

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According to the report, the inventory included 7.13 million steers and steer calves, up 2% from the previous year. This group accounted for 63% of the total inventory. Heifers and heifer calves accounted for 4.15 million head, which was an 8% increase from 2017.

Placements in feedlots during June totaled 1.79 million head, 1% above 2017 and in line with analysts’ expectations. Net placements were 1.74 million head. During June, placements were 400,000 head for cattle and calves weighing less than 600 lb., 345,000 head for those weighing 600-699 lb., 385,000 head for those weighing 700-799 lb., 378,000 head for those weighing 800-899 lb., 185,000 head for those weighing 900-999 lb. and 100,000 head for those weighing 1,000 lb. and greater.

Marketings of fed cattle during June totaled 2.01 million head, 1% above 2017 and also in line with pre-report estimates.

Rich Nelson, chief strategist for Allendale Inc., said that, for the most part, the report was neutral.

Slowing herd expansion

The USDA also released its bi-annual “Cattle” inventory report, which showed the nation’s cattle herd was 1% over last year, slightly over the average trade guess of an increase of 0.7%.

As far as the beef cow herd, the report showed a 0.9% over last year, but heifers kept for breeding declined by 2.7% from last year.

Nelson said the question right now is whether the U.S. is slowing is slowing its beef herd expansion.

“Bottom line is producers are taking action to stop and slow the expansion,” he said, explaining that this does not mean lower beef production for 2019, but it does mean slowing production growth.

“It won’t be until 2020 that beef production actually stabilizes,” he said, adding that the report does tell a story that cow-calf producers are beginning the process of slowing expansion.

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