The Van Trump Report

Liquidation of U.S. Cattle Herd Continues

America’s cattle herd shrunk for a third year in a row last year, a fact that likely doesn’t surprise farmers and ranchers in the drought-stricken Plains. All cattle and calves in the USDA’s semi-annual Cattle Inventory report totaled 91.9 million as of January 1, 2022, -2% smaller than last year’s 93.79 million and the smallest since 2016. The beef cow herd totaled 30.1 million as of January 1, also down -2% and the lowest since 2015. Milk cow inventory fell roughly -1% to roughly 9.37 million. The declines are largely attributed to a combination of drought and high feed prices that pressured producers to send even more cattle to slaughter last year. Labor shortages and limited processing capacity also contributed to the decline.

The biggest inventory loss at the state level came from Montana, where the herd is -10% lower than last year’s level. Several states lost more than 5%, including North Dakota, South Dakota, New Mexico, Arkansas, Missouri, Pennsylvania, and South Carolina. In Texas, where the majority of the U.S. herd resides, inventory is -3% lower. Two states recorded a new record high for cattle inventory – Idaho at 2.55 million head, and Alaska at 5,900 head.

Other stats include:

  • The 2021 calf crop in the United States was estimated at 35.1 million head, down -1% from the previous year’s calf crop.
  • All cows and heifers that have calved were -2 percent lower at 39.5 million head versus 40.3 million head last year.
  • All heifers 500 pounds and over as of January 1, 2022 totaled 19.8 million head, -2% below the 20.2 million head reported last year.
  • Beef replacement heifers, at 5.61 million head, were down -3% from a year ago.
  • Milk replacement heifers, at 4.45 million head, were down 3 percent from the previous year.

One of the key drivers of continued herd shrinkage is the ongoing drought across much of the west and northern plains that has been gradually expanding further into the central and southern plains. Drought across the southern plains was mostly easing through summer of 2021 but began to creep back in around September. In fact, Texas was nearly drought-free at the beginning of August 2021. Now, almost 87% of the state is experiencing some form of drought. Similarly, in Oklahoma, more than 88% of the state is in drought after nearly erasing it completely last summer. Around 53% of the U.S. cattle inventory is now in an area experiencing some level of drought, up from 48% at the start of the year and compared to 41% this same time last year.

Obviously, the situation could turn around dramatically if spring weather delivers some timely rains, allowing producers to return to herd building this year. However, if moisture levels aren’t enough to revive dry pastures and rangeland, it could mean even further cattle inventory declines ahead. Most expect feed prices will continue to climb this year after already shooting up around +30% in 2021, which makes the economics particularly brutal for those facing dried-out pastures. About half of U.S. hay and alfalfa areas are currently in drought, too.

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