By Kenny Burdine
In some ways, USDA’s July Cattle Inventory report brought some welcome news to cattle producers. Flat beef cow inventory and a decrease in beef heifer development suggested that the expansion phase of this cattle cycle may finally be over. I have always put more stock in the January inventory number, but this is the first report that clearly suggests a halt in expansion. Beef cow numbers were unchanged from a year ago and beef heifer development was actually down a little more than 4%.
Most all other estimates line up with this general overview. A slight decrease in the expected size of the 2019 calf crop is also good news for cow-calf operations who continue to struggle to see attractive returns to labor and capital. Cattle-on-feed numbers remain above 2018 levels, but this is largely a function of last year’s calf crop. A summary table from the inventory report can be found below.
| 2018 (1,000 hd) | 2019 (1,000 hd) | 2019 as % of 2018 |
| Total Cattle and Calves | 103,000 | 103,000 | 100 |
| | | | |
| Cows and Heifers That Have Calved | 41,800 | 41,700 | 100 |
| Beef Cows | 32,400 | 32,400 | 100 |
| Milk Cows | 9,400 | 9,300 | 99 |
| | | | |
| Heifers 500 Pounds and Over | 16,300 | 16,400 | 101 |
| For Beef Cow Replacement | 4,600 | 4,400 | 96 |
| For Milk Cow Replacement | 4,200 | 4,100 | 98 |
| Other Heifers | 7,500 | 7,900 | 105 |
| | | | |
| Steers 500 Pounds and Over | 14,500 | 14,700 | 101 |
| Bulls 500 Pounds and Over | 2,100 | 2,100 | 100 |
| Calves Under 500 Pounds | 28,300 | 28,100 | 99 |
| | | | |
| Calf Crop | 36,403 | 36,300 | 100 |
| | | | |
| Cattle on Feed | 13,300 | 13,600 | 102 |
Heifer retention is usually the focus of discussions about beef cow inventory, but I want to talk for a minute about cow slaughter. Beef cow slaughter was up more than 8% for 2018, which was much more than expected given the size of the cow herd. This was an early sign that herd expansion was coming to an end. This general trend has continued as beef cow slaughter is up 2% for the first six months of 2019. I think we can trace a lot of this back to drought in the Southern Plains from 2011-2013. Weather forced beef producers to cull very hard for a few years and the result was a younger cow herd. That has caught up with us now as a larger share of our cows are older, which means we are being forced to cull this cow herd harder. A summary graphic of cow slaughter can be found below.
Monthly Commercial Beef Cow Slaughter (1,000 head)
Finally, there is still a lot we don’t know about the impact of fire at the Tyson Plant in Kansas. It sounds like the damage was substantial and the plant is unlikely to be back on line soon. This was a very large plant that accounted for a significant share of fed cattle slaughter. So, there is no way to paint a pretty picture of this. Cattle markets are going to be impacted as that supply has to be absorbed by other plants. CME© live cattle futures for 2019 contracts were limit down on August 12th and 13th (when I wrote this article). August feeder cattle futures fell by $11 per cwt over those two days. Markets will adjust over time, but this is a significant shock on a market that is already struggling.