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Virginia Cooperative Extension -
 Knowledge for the CommonWealth

The Cattle Business - Inventory Update

Livestock Update, March 2001

Bill R. McKinnon, Extension Specialist, Livestock Marketing, Virginia Tech

Evidence suggests that the herd liquidation phase of the current cattle cycle is drawing to a close. Commercial cow slaughter in 2000 slowed by slightly better than 3% compared to the previous year. The nation's cowherd is down about 4.6% or 2 million head from the most recent peak in 1996. The slowing in cow slaughter linked with the modest upturn in heifer retention point to a bottoming in cow numbers soon.

It has been intriguing to watch that while cow and total cattle numbers have shrunk since 1996, pounds of beef production have grown. During 2000, the industry set a record for total pounds of beef production. How did that happen with a smaller cattle inventory? Certainly, slaughter weights continue to increase and more Holsteins are being directed to feedlots and away from veal production, but since 1996 feedlots have bid heifers away from replacement production. Since that year heifers have hit record levels as a percent of cattle placed on feed.

With substantially higher feeder prices forecast for at least the next three years, many cow/calf operations will respond by keeping back additional heifers (even though they will be behind the curve). As in previous cattle cycles, this heifer retention will further shrink feeder cattle supplies and beef production.

January 1, 2001
U.S. Cattle Inventory Report

Million Head

  2001 2000 2000 as a
% of 2000
All cattle 97.398.2 99
All cows 42.642.8 100
Beef cows 33.4 33.6 99
Beef heifers for
replacements
5.6 5.5 102

Perhaps the most significant change in the beef industry during recent years has been the turn around in beef demand. During 1999 and 2000 the industry halted the long decline in demand and loss of market share in terms of consumer spending on meats. The industry was able to move greater supplies of beef while improving prices. Whether this turnaround in demand is the result of new product development, a strong economy, poultry fatigue or a combination of factors; demand growth may be the single most important issue in profitability to the beef industry.

The significantly stronger prices for feeder cattle during the last couple of years capped by 2000's record-high fall calf prices might have been expected to trigger a stronger response in herd rebuilding. Dry growing seasons and high hay prices in much of the High Plains and Southwestern sections of the country limited the number of heifers kept back for replacement

January 1, 2001
U.S. Cattle Inventory Report
Virginia Estimates
Thousand Head
  2001 2000 2001 as a
% of 2000
All cattle1,6501,600103
All cows790770 103
Beef cows 671 651 103
Beef heifers for
replacements
116110105
Steers over 500 lbs.210185 114
Calves under 500 lbs.370370 100
  2000 1999 
Operations with cattle/calves 27,00028,000 
Operations with beef cows22,00023,000 

In the Virginia inventory numbers, it is interesting to note a couple of relationships. Virginia producers seem to be ahead of national averages in terms of cowherd expansion. The better crop growing conditions in the state in 2000 allowed Virginians to carry more cows and heifers through this winter. Additionally, the drought of 1999 kept many Virginians from carrying over calves last winter. It appears that operators are making up for that this winter by holding back 14% more steers this year.



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