Herd Expansion

[buckaroo_bif]

Modest Cattle Herd Expansion Indicated


The USDA Cattle report released Friday, January 27th indicates that a solid but moderate cattle industry expansion is underway in the U.S. The total cattle inventory for the nation was up 1.7 percent from a 2005 total that was revised lower. The increase is slightly higher in percentage terms than expected but very close to the absolute number indicated without the revisions.


The report also shows a one percent increase in the beef cow herd over a 2005 value that was also revised lower by 140,000 head. Total beef cows on January 1, 2006 were 33.25 million head. Beef replacement heifers were up 3.8 percent; again over a revised lower 2005 total. The result is that total beef replacement heifers on January 1, 2006 is roughly 65,000 head less than expected. The only surprise in the report is an unexpected 3.8 percent increase in dairy replacement heifers. The total U.S. calf crop in 2005 was up 0.7 percent as expected.



The total estimated supply of feeder cattle on January 1, 2006 is 28.2 million head. This is up 1.6 percent over 2005, mostly because of the 2005 revisions downward. The result is an estimated January 1 feeder supply that is smaller than 2001, 2002 and 2003 and only slightly higher than 2004 and 2005. The number of cattle on feed in the U.S. on January 1 was 14.1 million head, up 3 percent from one year ago.



These supply factors suggest a number of general indications for cattle markets in 2006. Total feeder supplies will remain tight and feeder prices are likely to stay strong. The ratio of January 1 cattle on feed to the estimated feeder supply is very high at 0.5; higher than 2004 and well above levels that occur at the price bottom of a cycle. For example in 1996, the ratio of January 1 cattle on feed to estimated feeder supply was under 0.39. The estimated feeder supply as a percent of 2005 calf crop is 74.7 percent, only fractionally higher than the 2005 value.



The second major implication is that herd expansion, while solidly underway is occurring at a modest rate and should not lead to rapid growth going into 2007. The beef replacement heifer value is a modest percentage increase on an absolute total that is the lowest in many years. It appears that the supply fundamentals of the beef industry will remain solid well into 2007 and perhaps beyond

 

[cfpinz]

Does that come with a money-back guarantee??? :shock: :shock: :lol:

 

[buckaroo_bif]

Does that come with a money-back guarantee??? :shock: :shock: :lol:

I was hoping so myself

 

[buckaroo_bif]

News Update
Feb. 7, 2006


Strong Profits Lead to Herd Expansion

Cow-calf producers responded to another year of record-high calf prices and continued to expand beef cow and replacement heifer numbers during 2005, Cattle-Fax reported last week. Despite the limited beef exports and one of the largest net beef supplies on record, prices for fed cattle, feeder cattle and calves were record-high during 2005.

The organization reports that, during 2005, the U.S. exported about 700 million pounds (lb.) of beef cuts compared to 415 million lb. in 2004 and 2.5 billion lb. in 2003. Mexico accounted for about two-thirds of 2005 beef exports.

Beef imports during 2005 were near-record and totaled about 3.6 billion lb. The largest increases in imports came from Canada and Uruguay.

According to Cattle-Fax, cattlemen should expect slightly lower prices for fed cattle during 2006, averaging $85 to $87. Fed cattle prices are expected to range from the mid-$90s at the spring highs and have risk back into the upper $70s at the summer lows. Feeder cattle prices are expected to average between $106 and $108 during 2006, which is $2 to $4 lower than 2005 levels. Prices are likely to trade in a fairly normal seasonal pattern and range from around $105 at the spring lows to near $115 or better at the highs. Calf prices are projected to trade in a range of $115 to $135 during the course of the year and average about $125 during 2006. Larger net beef supplies, increased cattle harvest and larger beef production will force prices lower during the year, compared to records set during 2005.

Cattle feeders, stocker operators, backgrounders and cow-calf producers should all experience slimmer operating margins during 2006 due to the larger available supplies. Market cow and breeding cattle prices are expected to be mostly steady during 2006. However, conditions could change if the drought persists in the Southern Plains.

Total cattle numbers increased nearly 2% during 2005 and totaled 97.1 million head on Jan. 1, 2006. Beef cow numbers increased for the second consecutive year and totaled 33.25 million head on Jan. 1, 2006 — up 330,000 head from a year earlier. Cattle harvest and beef production were about even with levels from a year ago. Steer and heifer harvest totaled 27.0 million head in 2005, while beef production totaled 24.6 billion lb. and was one of the smallest totals in the past 15 years. Fed cattle harvest during 2006 is expected to increase about 850,000 head due to larger on-feed totals and slightly larger inventory levels. Beef production for the year is expected to increase by about 1 billion lb. in 2006. Net beef supplies for the year are expected to increase during the year and be near record as increased market access and larger beef exports are expected to offset about half of the increase in domestic beef production.

— Release provided by Cattle-Fax.