U.S. cattle herd at 61-year low, but rebuilding may be underway

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Reuters / The U.S. cattle herd shrunk for a sixth straight year in 2012 due to high feed costs tied to drought and that should mean consumers will continue paying record-high prices for beef.

The U.S. Department of Agriculture Feb. 1 said the U.S. cattle herd as of January 1 was 89.30 million head, down 1.6 per cent from a year earlier and the smallest U.S. herd since 1952. Analysts expected a 1.8 per cent decline.

However, the data suggests ranchers are beginning to retain female breeding stock, the foundation for herd rebuilding, possibly in anticipation of even higher cattle prices.

“Ranchers are retaining heifers because of record prices for feeder cattle and the futures market is saying we’re going to get higher,” said University of Missouri livestock economist Ron Plain. Friday’s herd inventory results also reaffirms results issued in the government’s report in July 2012 in which the U.S. cattle herd at the start of 2012 was 2.3965 million head larger than 60 years earlier, but dropped below that level around April 2012.

U.S. cattle numbers have declined for several years as producers have encountered a number of hardships including mad cow disease that reduced U.S. beef exports for several years, a recession that hurt domestic beef consumption, a lengthy drought that damaged pastures, and record-high feed prices.

Those who raise, feed and process cattle in the central and western U.S. Plains this year felt the heat from the worst dry spell in more than 50 years. It raised feed and hay costs to all-time highs last summer. Chicago Board of Trade corn futures in December averaged $7.24-1/8 per bushel, the fourth highest as drought damaged the crop. Prices reached a record high of $8.43-3/4 on August 10.

The smaller cattle herd has increased retail beef prices, with a record high of $5.15 per lb. set in November 2012. That slipped to $5.11 the following month but was still up from $5.01 a year earlier.

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