FB: Cattle Inventory Report Has Positive Implications

FOR IMMEDIATE RELEASE

WASHINGTON, D.C., February 15, 2007 -- The Agriculture Department’s cattle inventory report issued last week revealed the total U.S. beef cattle population to be down 100,000 head, with less than 32.9 million head as of the first of the year. American Farm Bureau Livestock Economist, Jim Sartwelle blamed severe and persistent drought conditions in top cattle producing regions for the herd reduction.

“While record high calf and feeder cattle prices the last three years encouraged beef cattle producers to increase their individual herds and reap the benefits, it’s obvious that persistent drought in many important cow-calf productions prohibited producers from holding onto the brass ring,” Sartwelle said.

Heifers retained for replacement females dropped by 27,000 head to settle at 5.877 million, and replacement heifers expected to calve during 2007 decreased slightly from a year prior to 3.568 million head.

The report also showed dairy cows increased by 1 percent to 9.13 million head. Heifers retained for replacements also increased slightly to 4.31 million head. However, those replacements expected to calve during 2007 decreased by 54,000 head. Sartwelle said the largest decline was in New York, which is currently the third largest dairy producing state.

Sartwelle said the overall outlook should have positive implications for the beef sector. Jan. 1, 2007 cattle on feed numbers represented a record-high for first-of-the year placements since 1996, reporting 14.268 million head.

“There is a strong probability once marketing patterns return to normal from their weather- induced December and early January slowdown, the trade will see reduced supplies of feeder cattle,” he said. “I base that expectation on recent futures market activity.”

Sartwelle said that the next big hurdle for the cattle markets will come as a part of the March 30, USDA prospective plantings report.

“Skyrocketing corn prices have taken their toll on calf and feeder cattle markets.” Sartwelle said. “If the report shows the significant increase in corn acreage for this summer that most in the trade expect, that could take some of the pressure off calf and feeder cattle prices this spring and summer.”

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CONTACTS:                Tracy Taylor Grondine                     Mace Thornton

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