LITTLE ROCK — The U.S. beef-cow herd on July 1 was the smallest in at least 37 years as farmers remained wary of beef demand during the economic recovery after losing money the past two years.
The beef-breeding herd totaled 31.7 million head as the month began, down 1.6 percent from 32.2 million a year earlier, the U.S. Department of Agriculture said Friday in a semiannual report. That marked the fewest cows for the date since at least 1973, said Ron Plain, a livestock economist at the University of Missouri in Columbia. Six analysts in a Bloomberg News survey expected a 1.4 percent drop, on average.
Cattle producers may make about $51.53 per cow this year, after losses in 2009 and 2008 because of high feed costs and declining beef demand, said Erica Rosa, an economist at the Livestock Marketing Information Center in Denver. Uncertainty about economic recovery may be keeping ranchers from expanding herds, she said.
“Overall, cow-calf producers continue to reduce herd numbers, rather than expand by retaining heifers,” Rosa said by e-mail. “Although calf and feeder-cattle prices are higher than 2009, input/ production costs still remain high and there is still quite a bit of uncertainty currently and about the future.”
The overall U.S. beef and dairy herd totaled 100.8 million head at the start of July, down 1.2 percent from a year earlier, according to the USDA report. That alsomarked the smallest size for July since at least 1973, Plain said. The USDA’s estimate matched analysts’ expectations before the report.
“It’s a steady, continuing decline,” Plain said after the report. Farmers “lost money, and that’s why they started cutting back. As to why they keep cutting, there’s just a lot of uncertainty. I wonder how many cattlemen were short on money for a variety of reasons like the tough economy, and now they’re selling off a few cows to generate cash.”
An additional 4.4 million beef heifers were being kept back for breeding in the next year, down 2.2 percent from July 2009. Analysts expected a 2.1 percent decline. Dairy farmers were holding 4.05 million replacement heifers back for breeding, 2.5 percent more than a year earlier and more than the 0.07 percent increase expected by analysts.
“The dairy guys have had a tough time of it and lost a lot of money, but they don’t seem to be able to resist the temptation to save a lot of heifers,” Plain said. “The dairy guys are probably going to still struggle with too large herds and too much milk.”
The 2010 calf crop fell 1.2 percent to 35.4 million head, compared with a 1.1 percent decline estimated by analysts.
Cattle futures for October delivery rose 0.325 cent, or 0.3 percent, to 94.725 cents per pound on the Chicago Mercantile Exchange. The most-active contract has climbed 5.1 percent in the past year. Feeder-cattle futures for August settlement rose 0.275 cent, or 0.2 percent, to $1.15175 a pound.
The price of wholesale choice beef, an indicator of demand for the meat, rallied 12 percent this year through midday Friday, according to USDA data. The price was down 5.2 percent last month, the second straight decline.
Business, Pages 26 on 07/24/2010