December 26, 2010 USDA report shows national cow herd still declining
December’s Livestock, Dairy and Poultry Outlook report shows high rates of beef-cow slaughter and a high ratio of heifers on feed. Beef trade meanwhile, picks up as the United States becomes a net exporter during the fourth quarter.
Highlights of the USDA report include:
- Dryland winter wheat pasture in some areas of the Southern Plains is not developing very rapidly and likely will not provide much pasture this winter. This could lead to lightweight feeder cattle entering feedlots, despite relatively high corn prices, especially given hedging opportunities available recently.
- Despite the winter wheat pasture outlook, lightweight feeder cattle have sold at very respectable prices into December.
- Weekly beef cow slaughter for October through November 27 has averaged about 4 percent over the same period last year, and dairy cow slaughter has averaged over 8 percent above a year earlier.
- These rates almost ensure that cow inventories on January 1, 2011 will be lower than those on January 1, 2010.
- Feeder cattle supplies outside feedlots on October 1, 2010 declined by almost 4 percent from October 2009. This decline is consistent with the increased feedlot placements observed since August.
- The estimated decline in feeder cattle supplies from July 1 to October 1 was about 21.5 percent, a decline that is large compared with other years since 2001, which typically have ranged from 19.4 to 20.6 percent of July 1 supplies.
- These declines may suggest feeder cattle are being pulled forward into feedlots. As a result, feeder cattle supplies for 2011 will likely be reduced.
- If available supplies of feeder cattle are pulled forward in sufficient numbers, beef production early in 2011 could exceed production for the same periods in 2010.
- Fed cattle prices have also held up nicely, likely as a result of the contribution of byproduct values to packer margins.
- Byproduct values are at levels not observed since July of 2008, largely due to recent increased demand for hides, hearts, and some of the other edible byproducts.
- Retail Choice beef prices for November 2010 were again counter-seasonally higher by less than 1 percent over October 2010 and by 4 percent over November 2009 prices.
- U.S. beef exports for 2010 are forecast at 2.3 billion pounds, 19 percent higher than 2009 levels.
- Exports through October were 17 percent higher year-over-year.
- As in September, the United States was a net exporter of beef during the month of October.
- On a volume basis, U.S. exports rarely exceeded imports prior to December 2003 and have done so only on a few occasions since then.
- Through October, U.S. exports show a recovery of 91 percent of pre-BSE levels after the posting of year-over-year growth of 25 percent to Japan and 119 percent to South Korea.
- Exports to Taiwan, Hong Kong, Egypt, and other countries, including Russia, have also helped to significantly boost 2010 total U.S. export levels closer to the historical levels posted in 2003. Exports to Taiwan, Hong Kong, and Egypt were 46, 51, and 101 percent higher, year-over-year, and along with sales to Vietnam and Russia, constituted 23 percent of total U.S. beef exports through October.
- Fourth-quarter exports this year are expected to show over 25-percent growth, reaching 650 million pounds.
- Annual beef exports in 2011 are forecast at 2.3 billion pounds, with quarterly year-over-year growth expected to continue through the first half of the year.
- U.S. beef imports for 2010 are forecast at 2.36 billion pounds, a 10-percent year-over-year decline.
- Imports through October were 11 percent lower than the comparable 2009 levels.
- With fourth-quarter imports forecast at 500 million pounds, the United States is expected to be a net exporter of 150 million pounds of beef in the final quarter of this year.
- Increased numbers of slaughtered cows in the United States— up over 4 percent to date despite the already diminished U.S. cow herd—have been able to partially offset the decrease in imports of processing beef this year.