American cattle herd declines to 61-year low

Drought erodes feed supply, drives up prices for farmers

By

Published:

 

CHICAGO -- The U.S. cattle herd declined to the smallest size in 61 years as of Jan. 1, after the worst drought since the 1930s eroded feed supplies and damaged pastures.

Beef and dairy farmers held 89.3 million head of cattle as the year began, down 1.6 percent from the start of 2012, the Department of Agriculture said Friday in a semiannual report. That's the smallest herd since 1952, the USDA said. Eight analysts in a Bloomberg News survey were expecting a 2 percent drop, on average.

"The ongoing drought and high feed prices have forced people to continue to liquidate as necessary, primarily due to feed availability and price," Elaine Johnson, an analyst at Cattlehedging.com in Westminster, Colo., said in an interview before the report.

Drought conditions are expected to persist through the Great Plains and spread across most of Texas, according to a three-month U.S. outlook by the Climate Prediction Center that's valid through April 30. The drought reduced the Midwest corn harvest in 2012, the third straight year of declines, sending the price of the main ingredient in

livestock feed to a record high in August.

The beef-cow herd totaled 29.295 million animals on Jan. 1, down 2.9 percent from a year earlier, the government said. Analysts forecast a 1.7 percent drop. The number of young, female cattle for beef-cow replacement rose 1.9 percent to 5.361 million, according to the USDA. Analysts expected a 0.5 percent rise.

U.S. beef production will total 11.273 million metric tons (24.9 billion pounds) this year, the lowest since 2004 and down 3.7 percent from 2012, according to the USDA.

Wholesale beef prices are down 0.2 percent in the past 12 months and prices touched $1.9938 a pound on Oct. 24, the highest since at least 2004, according to the USDA. The price of all-fresh retail beef climbed to record $4.797 a pound in November, USDA data show. The price eased to $4.766 in December, yet was still 4.7 percent higher than a year earlier.

The inventory of heifers for milk-cow replacement totaled 4.551 million, down 1.5 percent from the same time last year, the USDA said. The average analyst estimate was for a 0.3 percent decline.

The number of calves born during 2012 was estimated at 34.279 million, down 2.9 percent from a year earlier, according to the USDA.

Cattle futures for April delivery fell 0.3 percent to $1.323 a pound at 12:51 p.m. on the Chicago Mercantile Exchange. The price was up 3.3 percent in the past year through Thursday.