This was expected given that slaughter of cull cows was 4.3% higher during 2011 than in 2010. Although cattle prices were record high in 2011, a severe drought in the southern plains forced a lot of cattle to slaughter. The Texas cattle herd is a remarkable 1.4 million head (10.5%) smaller than a year ago.

Revisions. There were several upward revisions of data from the January 2011 inventory survey. The size of the 2010 calf crop was revised upward by 10,000 head (0.03%) and the January 2011 cattle inventory increased by 100,000 head (0.11%). The size of the 2011 calf crop was revised down by 0.5%.

Total Inventory. The total number of cattle and calves in the US on January 1, 2012, was 90.8 million head, down 2.1% from 2011 and 6.0% lower than at the last cyclical peak in 2007. This is the lowest January cattle inventory since 1952.

Calf Crop. The 2011 calf crop is estimated to be 35.3 million head, down by 1.1% from a year earlier and the smallest calf crop since 1950. The size of the calf crop has declined each year since 1995.

Cow Herd. The inventory report shows that the number of beef cows that have calved (29.9 million) was 3.1% smaller than on the same date last year. The number of dairy cows that have calved (9.2 million head) was up 0.9% from a year ago. The combined cow herd is 2.2% smaller than in January 2011.

Replacement Heifers. There were 5.2 million beef heifers being held on January 1 to add to the cow herd, 1.4% more than January 2011. The number of dairy replacement heifers, 4.5 million head, was down 0.9% from 12 months earlier. The combined number of replacement heifers is up 0.3% from a year-ago. The number of beef heifers expected to calve in 2012 is up 1.2%. The number of dairy heifers expected to calve this year is down 0.9%. When added to the inventory of cows that have calved, the data imply the 2012 calf crop should be roughly 1.9% smaller than last year’s crop.

Feeder Cattle Supply. At the start of the year, the number of steers weighing 500 pounds and over was down 2.0%; the number of 500 pound plus heifers not being held for cow replacements was down 2.2%; and the number of calves weighing less than 500 pounds was down 2.8% from a year ago. In total, the inventory of feeder cattle was 2.3% smaller than 12 months earlier.

Cattle Slaughter Forecast. For 2012, fed slaughter is expected to be roughly 2% lower than a year ago. The number of cattle on feed January 1 was up 0.8% in total, with the number on feed in feedlots with one-time capacity of 1,000 head or more up 3.0%. Slaughter of cull dairy cows is expected to be higher in 2011. A decline in beef cow slaughter is expected.

Summary. Animal numbers imply the January 2013 inventory will be roughly 1.5% smaller than the 2012 number. Lower inventories should mean stronger prices. It appears that 2012 fed cattle prices will average over $120/cwt on a live weight basis with 2013 prices higher still. High corn prices should hold down feeder cattle prices in coming months. US beef exports in 2011 were record high. Through November, beef exports were 23.2% above year-ago levels. As expected during a worldwide recession, meat demand was soft in 2009 and 2010. If the economy grows, then beef demand should improve. Demand for slaughter steers and heifers was up over 5% during 2011 compared to a year earlier. The strengthening income picture for cow-calf operations should slow beef cow slaughter and ultimately lead to herd expansion.

The data from USDA's July 2012 cattle inventory report is in the table below.

       Inventory of Cattle and Calves, July 1, 2010-2012              12 as %          2010 2011 2012    of 2011        --------- 1,000 head ----------  Cattle & Calves     93,881.2     92,682.4    90,768.5      97.9  Cows & Heifers that Have Calved   40,456.4     39,999.2    39,112.4      97.8     Beef Cows       31,370.9     30,849.6    29,882.9      96.9     Milk Cows        9,085.5      9,149.6     9,229.5     100.9  Heifers 500 Lbs. & Over    19,745.8     19,575.8    19,387.8      99.0     For Beef Cow Replacement       5,451.0      5,138.6     5,211.6     101.4     For Milk Cow Replacement       4,526.2      4,568.2     4,527.0      99.1     Other Heifers    9,768.6      9,869.0     9,649.2      97.8  Steers 500 Lbs. & Over     16,510.4     16,397.0    16,071.5      98.0 Bulls 500 Lbs. & Over       2,190.1      2,155.1     2,052.0      95.2 Calves Under 500 Lbs.      14,978.5     14,555.3    14,144.8      97.2  Calf Crop    35,694.8     35,313.2  Cattle on Feed      13,642.2     14,012.9    14,121.4     100.8  Actual federally inspected cattle slaughter and prices for 2008, 2009, 2010 and 2011 along with forecasts of slaughter levels and prices in 2012 are given in the table below.  Federally Inspected Slaughter   Nebraska   --Oklahoma City-- Steers& Beef DairySlaughter   750-800# 500-550# Heifers Cows CowsSteers--Feeder Steers-- Quarter—------thousand head---------------dollars/cwt-------- Q1 08 6514.0 817.7 665.189.59 99.88121.75 Q2 08 7265.7 901.8 594.792.83106.60122.19 Q3 08 6982.6 908.8 658.298.45110.81122.85 Q4 08 6277.5 940.9 673.388.22 94.62105.22 200827040.03569.32591.292.27102.98118.00  Q1 09 6159.7 781.9 762.580.98 92.83110.03 Q2 09 6866.5 770.2 682.884.53 98.63116.09 Q3 09 6704.4 818.6 703.282.78 99.40107.87 Q4 09 6324.1 954.3 667.082.43 93.67109.31 2009 26054.83325.02815.382.68 96.13110.83  Q1 10 6329.5 847.6 711.0 87.93 98.73118.01 Q2 10 6812.1 910.3 658.1 96.59112.65130.93 Q3 10 6886.9 871.1 700.0 95.59112.29124.04 Q4 10 6614.71000.9 737.5100.01111.15125.16 201026643.23629.92807.1 95.03108.71124.54  Q1 11 6445.0 815.0 781.0110.48127.20147.12 Q2 11 6794.0 896.0 677.0114.07131.08146.61 Q3 11 6736.01030.0 699.0114.07134.74142.33 Q4 11 6291.01057.0 758.0122.75142.72159.48 201126266.03798.02915.0115.18133.94149.03  Q1 12* 6340.0 810.0 770.0118-125145-155165-180 Q2 12* 6670.0 885.0 675.0119-126150-160170-185 Q3 12* 6600.0 950.0 710.0119-126155-165167-182 Q4 12* 6150.0 965.0 770.0123-130155-165165-180 2012*25760.03610.02925.0120-127154-164167-182  * forecast  

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