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Limit Up

By Administrator

February 2, 2024

Though it wasn’t a surprise, perhaps the biggest headline in the ag world lately was due to the USDA cattle inventory report last week. The USDA confirmed that we now have the smallest herd of cattle in the country since 1951, and there aren’t many signs that it is rebuilding.

According to the report, there were 87.2 million head of cattle and calves on U.S. farms as of January 1, 2024. This is a 1.9 percent decline from a year ago, but was right on the average expectation of analysts. Of those 87.2 million head, all cows and heifers that have calved totaled 37.6 million. Beef cows are down 2 percent from last year, coming in at a total of 28.2 million. Beef cow estimates were also right on the money; this is the lowest number of beef cows since 1961. The total number of milk cows in the U.S. decreased slightly to 9.36 million. The U.S. calf crop was estimated at 33.6 million head, which is down 2 percent from 2022. All cattle on feed came in at 14.4 million head, which is up 2 percent from 2023.

The United States cattle herd has been shrinking for 5 years now, and finally hitting a record low not seen in over 70 years. Rebuilding the herd has been slow going – primarily because of droughts which sent heifers to the feedyards rather than being held back for breeding. Weather is a big driver in the patterns of cattle placements. Droughts, floods, and cold weather all change the placement patterns and can have a significant impact on cattle supplies. This also impacts packing plants and the availability of what cuts you are able to buy when you are in the grocery store. The major cold snap we had in January also impacted cattle weights. Falling carcass weights prove how the bitter cold temperatures did a number on cattle performance.

We are returning to some warmer weather though, and Texas has seen a lot of rain. This will certainly be beneficial for summer pastures and will target more cattle for grazing. On the flip side of that, though, that means there are reduced cattle supplies for feedyard placement. At already low numbers, there may be a lot of pens at the feedlots and pastures left empty this year.

The cattle markets did open higher in response to the USDA report, so that is good news on that front. This is not good news for commodities though. Lower cattle on feed equals fewer animals that are eating. The implications of the low cattle numbers will be huge with feed demand. It is no question why we have seen the futures prices in grains and soybean meal decreasing over the last year – we have ample supplies and decreasing demand. 2024 is off to an interesting start, and I think it is only going to continue.

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