I would think the herd expansion is a wash--those expanding are tempered by those taking advantage of high prices and not wanting to winter over in what is projected to be a tough 2014-2015 winter. As of August 2014 USDA says:
Beef and veal prices continued to rise, increasing 4.2 percent from July to August, the largest month-over-month increase since the end of 2003. Beef and veal prices are up 15.1 percent year-over-year. Prices remain high, as the U.S. cattle inventory continued to decrease in recent months and is currently at its lowest level since 1951. Pasture conditions have started to improve in the West; however, there are not yet any signs of herd expansion.
And:
WASHINGTON, D.C. (RFD-TV) Tight cattle supplies might become a bit tighter in 2015, if the U.S. Department of Agriculture's first beef production forecast for next year is any indication.
"We're looking for another 1 percent reduction in beef production, owing to the tight cattle supply, the size of the herd, and so forth. We're looking at 24.56 billion pounds in 2014 and a reduction to 24.32 billion pounds in 2015," said World Agricultural Outlook Board Chairman Gerry Bange.
However, Bange notes that tight supplies should bode well for beef producers from a price stand point.
"If you look at the 2015 price for steers, you're seeing an increase from about 3.2 percent. Again, we're looking at a continuing tight supply on the beef front. So we're looking at a price now of $150.75 per hundred-weight for 2015, compared to $146.09 per hundred-weight for 2014," said Bange.
As for trade, U.S. beef exports are expected to be down 3.3 percent year-to-year.
This report is from our partners at the USDA.[/quote]
Fewer cattle going to slaughter but is it just to hold them back for even higher prices or is it really for total herd expansion?
The Agriculture Department said animals entering feedlots during the month totaled 1.56 million, the lowest level for the month since the current data series started in 1996. Before then, USDA had estimated cattle sizes, but increased the number of states it used to calculate the monthly figure. In Iowa, 56,000 cattle were placed on feed during July, up 17 percent from the same month a year ago.
The record low figure comes as cattle operators are holding back on sending animals to feed lots, taking of advantage of favorable grazing conditions in recent weeks. While the animals are being kept on farms and ranches now, they will help rebuild the herd size to take advantage of potentially higher prices in the future.
"We knew that supplies were extremely tight in June and then it got worse in July," said Rich Nelson, chief strategist with Allendale Inc. "This report confirms that expansion in the industry has started, which actually means for (the next few years) of this expansion process that numbers are going to be tight."
http://www.desmoinesregister.com/story/ ... /14458447/
But yes, new normal--there isn't much drop at all in beef demand, but I sure see some changes in how beef is being marketed on the consumer end. Thinner cuts, lots of packaging changes, and more and more, I see smaller chuck and rump roasts in the beef fridge section, as well as lots of sub choice/sub select "value packs" of tbone, sirloin and ribeye steaks especially in the bigger grocery stores. Chief USDA economist doesn't look for any change to make down to the consumer end until at least 2016.
If you look at production numbers, we did see some increase in the cow herd in the Upper Midwest and the Eastern Corn Belt area. However, most of the areas west of the Mississippi did see a decline. The concern is that 45% or more of the cattle inventory is currently in a drought area. Some of these areas have been under persistent drought for over four years. There is also feeder cattle from Canada and Mexico being imported, those additional cattle help with the supply as well.
We believe we will see positive signs toward herd size increase in 2015, but that means we will not see significant supply changes until 2016.
http://factsaboutbeef.com/2014/04/23/us ... bout-that/
http://www.usda.gov/oce/commodity/wasde/latest.pdf
11 Sept 2014:
For 2015, beef production is cut as lower placements of cattle in the second half of 2014
are expected to reduce supplies of fed cattle in 2015 despite heavier carcass weights.
Forecasts for 2014 and 2015 beef imports are higher due to tight cull cow supplies and strong
consumer demand for processing grade beef. Beef exports for 2014 and 2015 are unchanged.
The cattle price forecast for 2014 is raised from last month on tightness in supplies of fed cattle. The
price forecast for 2015 is unchanged.
Then there's this ever present ? hanging over everyone's head...
