New USDA estimates suggest the U.S. cattle herd has stopped shrinking, signaling the beginning of what could be an expansionary phase of the cattle cycle.
Cattle and calves totaled 94.2 million head on July 1, up from 94 million a year earlier, according to a July cattle report USDA published on Friday. That's an increase of around 0.2%.
While beef cows fell 28.5 million head, a 1% decrease from last year, the number of heifers weighing more than 500 pounds grew around 1% to 14.7 million head, a signal producers have begun holding some back for the cow herd.
“The net message is, there’s very, very light expansion going on. We cannot say it’s the end of this high price story, the big picture just by itself," said Rich Nelson, chief strategist at Allendale Inc., an agricultural market research and trading firm.
“There is clear-cut evidence that we're going to have a lightly building U.S. beef production number in the next few years, but it's not as dramatic as the prior expansion” from 2014 to 2015, Nelson said.
The numbers show there is “light heifer retention now,” Nelson said. “Back on Jan. 1, heifers held back for the cow herd were up a light 0.9 percent over the prior year. That was expanded now as of July 1 to a 2.7% increase.”
“The way producers are taking advantage of higher prices now is they are holding back heifers and maybe breeding some and selling them off the farm very quickly once they're confirmed bred,” he added.
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