USDA Cattle Inventory report predicted to reflect continued declining inventory

The Jan. 31 Cattle Inventory report is expected to show the U.S cattle herd, already at a 73-year low, has fallen another 1.6% due to three consecutive years of drought pressure throughout major portions of the Western cattle producing regions, predicts American Farm Bureau Federation Economist Bernt Nelson.

During a livestock outlook session at the American Farm Bureau Federation Annual Meeting in San Antonio, Texas, Nelson said higher slaughter rates through late December is evidence that cattle producers are not yet holding back heifers to begin rebuilding inventory levels.

“We saw a lot of heifers getting placed on feed, and we continue to see some elevated numbers, but they slowed down a little bit,” Nelson said. “If we look at placements, we have very strong numbers of cattle on feed going into this year.”

The end result, according to Nelson, is lower inventory levels, which had dropped from 91 million to 87.2 million last year and will drop to 86 million in this year’s report; adding the elimination of the USDA July Cattle report last year creates more uncertainty to the upcoming report and markets.

The current restriction of cattle imports from Mexico due to the discovery of New World Screwworm (NWS) is compounding the low inventory levels, said Nelson, who estimated 1.3 million head are normally moved across the border annually to U.S. feedlots.

While the shipping restriction on cattle from Mexico is unwelcome news to Texas cattle feedlots, Nelson said that if NWS were to make its way into the U.S., the economic devastation would be in the “billions” of dollars.

According to Nelson, protocols are being developed on both sides of the border to allow shipments to resume at two points of entry.

“Right now, the protocol calls for quarantines — seven days in Mexico, seven in the United States, with a shot of ivermectin on both sides the two ports being focused on will be Chihuahua and Sonora. These two will have to things established and secured before they move on to any other points of entry,” Nelson said.

Low inventories have led to market volatility and kept retail beef prices trending toward record levels, according to Nelson, warning producers to pay attention to consumer demand, which has held steady despite higher retail prices.

“When we look at the choice select spread as an indicator of demand right now, it's really wide, and that indicates that the consumer is still willing to pay a premium price for choice over select. That’s a strong indicator of strong demand,” Nelson said. “If consumers have money in their pocket, they’re going to buy beef.”