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Thursday March 22, 2018
Beef supplies going up

What a difference two years makes.

At the start of 2016, beef cattle supplies remained vanishingly tight, as the national herd was only beginning to show recovery from devastating drought in the years before. USDA's Jan. 29, 2016, Cattle report came in 3 percent higher than that of 2015's, at 92 million head, with a calf crop that had grown 2 percent from the previous year—making it the first year the calf crop had grown by 1 percent or more in more than two decades. Still, market analysts were cautioning against expecting any significant impact on beef supplies until late 2016, with higher sustained wholesale prices as a natural result.

Today, USDA's Jan. 31 report summarizing the U.S. cattle herd predicted all cattle and calves in the United States totaled almost 2.5 million head higher, another 1 percent above the 2017 inventory. The number of replacement female beef animals, those farmers save back to breed to produce calves later, was down 4 percent from a year ago, indicating ranchers are choosing to send them to market as meat animals. The 2017 calf crop in the United States was estimated at 35.8 million head, up 2 percent from last year's calf crop. Calves born during the first half of 2017 were estimated at 26.0 million head, up 2 percent from the first half of 2016. Calves born during the second half of 2017 were estimated at 9.81 million head. The number of cattle and calves on feed for the slaughter market totaled 14 million head, up 7 percent from the Jan. 1, 2017, total of 13.1 million head. Cattle on feed, in feedlots with capacity of 1,000 or more head, accounted for 82.0 percent of the total cattle on feed on January 1, 2018, up 1 percent from the previous year. The combined total of calves under 500 pounds and other heifers and steers over 500 pounds (outside of feedlots) is 26.1 million head, 2 percent below one year ago.

USDA also reported that in October and November of 2017, some persistent dry conditions in the Southern Plains likely left cattle producers there with little choice but to send calves into feedlots in preparation for market. That situation likely further increased the potential supply of beef later in the year: According to USDA, 14.3 percent more cattle were on feed on November 1 this year than the same time last year. The 2018 beef production forecast was raised from last month by 170 million pounds to 27.8 billion pounds on greater expected marketings and slaughter.

Iowa State economists note that rising pork production will combine with higher beef and poultry production for another record total meat supply in 2018. Domestic per capita meat consumption is not expected to be a record, owing to continued exports of all meats soaking a portion of the large supply, but it is expected to increase another 1.5 percent this year, on top of the 0.8 percent increase in 2017. For 2018, that per capita quantity is projected to equal 222.8 pounds, the highest since the series calculation began. The most important factors driving per capita disappearance, Iowa State says, are forecast increases in year-over-year production of beef (up 6.1 percent), pork (up 5.4 percent), and broiler meat (up 2.1 percent).

And it appears to be more than just a matter of consuming bigger supplies; instead, a true steady increase in demand is occurring. USDA notes the magnitude of the per-capita consumption change indicates an increase in both beef and pork demand. Per capita fresh beef consumption for the last quarter of 2017 increased 2.5 percent from the previous year, while prices only decreased 1.9 percent. If beef demand would have remained flat, the price decline would have been larger. Pork consumption increased 3.3 percent, while prices increased 1.4 percent. With consumers eating more pork and paying higher prices for those increased pounds, demand increased considerably.

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