Increase in U.S. Calf Crop Points Towards Larger Beef Supplies in 2018-2019

Although it's not clear from the report that beef industry expansion has come to a grinding halt, it does suggest expansion interest is waning. For example, the number of beef heifers being held by producers for herd replacement on July 1st was 2 percent smaller than in 2015 and, when expressed as a percentage of the beef cow inventory totaled just 14.5 percent. In contrast, when the beef industry was expanding rapidly this ratio climbed above 15 percent. Additionally, the ratio of female (cow and heifer) slaughter relative to steer slaughter has been above a year ago 5 out of the last six months, the exception occurring in February. The increase in female relative to steer slaughter suggests herd expansion has slowed, if it has not actually come to a complete halt. USDA's Cattle on Feed report confirmed that the on feed inventory remains well above last year. Early in 2017 the on feed inventory was very near a year earlier, but net placements on feed have been substantially above the prior year every month except February. The placement build-up means that, despite a good marketing pace throughout 2017, pushed the on feed inventory up with a July 1 inventory that was 4.5 percent above the prior year. The combination of a larger cattle on feed inventory and larger placements both point to fed cattle marketings during the last half of 2017 remaining above 2016's.