Cattle Numbers Fall Again in 2009

By: Kenny Burdine, UK Ag Economist

Feeder cattle markets opened 2010 a bit stronger than they closed 2009, and got some nice support from USDA's annual crop production summary during the second week of January. Estimates surprised the markets, placing the 2009 corn crop larger than 2007's record level. CME corn contracts traded down about $0.40 per bushel in the days that followed, and have trended further down since then. Kentucky feeder cattle prices moved up by $5-$10 per cwt from their pre-Christmas levels and have been further supported by improved fed cattle prices.

Late January brought USDA's Cattle Inventory report, and as expected, beef herd liquidation continued during 2009 as cow-calf operators struggled to cover costs. Estimated beef cow numbers fell by about 1%. Heifers held for beef replacements fell by about 2% suggesting that unless things change, it is not likely that beef cow numbers will increase during 2010. For the most part, these numbers came in close to market expectations. The following table shows the January 1, 2010 estimates from USDA.

USDA January 1, 2009 Cattle Inventory Report

	2009 (1,000 hd)	2010 (1,000 hd)	2010 as % of 2009
Total Cattle and Calves	94,521	93,701	99
Cows and Heifers That Have Calved	41,045	40,456	99
Beef Cows	31,712	31,376	99
Milk Cows	9,333	9,081	97
Heifers 500 Pounds and Over	19,576	19,666	100
For Beef Cow Replacement	5,531	5,436	98
For Milk Cow Replacement	4,410	4,516	102
Other Heifers	9,635	9,714	101
Steers 500 Pounds and Over	16,769	16,440	98
Bulls 500 Pounds and Over	2,184	2,190	100
Calves Under 500 Pounds	14,948	14,949	100
Cattle on Feed	13,856	13,642	98
	2008	2009
Calf Crop	36,153	35,819	99

Source: NASS, USDA

Kentucky producers enjoyed much more favorable weather in 2009, which increased hay production and decreased hay feeding days. While this was welcome following two drought years, it did not appear to slow the shrinking of the KY cow herd. Kentucky beef cow numbers were estimated to be down by 44,000 (-4%). I expect that production costs will be a bit lower this year as Potash prices seems to have fallen like Nitrogen and Phosphorous did last year. Calf prices should also continue to improve as we move into spring and summer, before beginning their seasonal fall decline. With a little help from the economy, this fall decline may not be quite as steep as what we have seen in recent years.