Klassen: USDA confirms lower calf crop

Feb. 1 — The U.S. Department of Agriculture’s cattle inventory report was considered constructive for the beef complex. Total U.S. cattle inventory as of Jan. 1 was 93.701 million, down one per cent from last year. Beef cows that have calved were also down one per cent from last year at 31.376 million. The 2009 calf crop was reported at 35.92, down one per cent from 2008 and the smallest since 1949.

The category of beef heifers weighing 500 pounds showed that the U.S. cattle producer is improving the herd with younger heifers but not necessarily expanding. Heifers for beef cow replacement were down two per cent from Jan. 1, 2009, at 5.436 million head. Beef replacement heifers expected to calve in 2010 were up two per cent over last year at 3.385 million head. This shows that the U.S. cow-calf producer held back heifers last spring for breeding, while liquidating older cows.

Looking at past history, it takes about two years for the U.S. cow calf producer to move into expansion after experiencing high prices. Therefore, look for further consolidation in the U.S. cattle herd throughout 2010.

Due to the stronger Canadian dollar, feeder cattle exports to the U.S. were very low last fall. Larger numbers are now coming on the market but demand is holding up for two main reasons. Buying interest for grass cattle is coming forward sooner than normal, because tighter supplies are expected later in spring.

Secondly, some finishing feedlots are buying very light-weight calves and putting them in custom backgrounding lots. The U.S. feeder market is expected to trade at a premium to Canadian values, enhancing export demand later in summer. Feedlots are looking to secure summer inventory.

— Jerry Klassen is a commodity market analyst in Winnipeg and maintains an interest in the family feedlot in southern Alberta. He can be reached by email at [email protected] for questions or comments.

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