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USDA Reports Lower Cattle Inventory

posted on January 30, 2004

The Chicago Mercantile Exchange announced this week that it plans to prohibit all cattle aged 30 months or older from future CME deliveries. That change would take effect with the February contract.

The CME says it took the action because the older cattle are being valued at lower prices than younger cattle. The exchange feared its futures contracts could become a "dumping ground" for cattle of discounted value.

Indeed, there's little doubt that more cattle are being sent to market, as evidenced by USDA's cattle inventory released Friday.


USDA Reports Lower Cattle Inventory

The nation's cattle herd declined for the eighth straight time. The USDA's semi-annual cattle inventory report released Friday afternoon shows 94.9 (M) Million cattle and calves in the U.S. as of January first. That's one percent below January 1, 2003.

This most recent total is the lowest since 1959, when there were 93.3 (M) million head.

Some analysts say the low numbers reflect the increased culling of dairy herds and a ban on imports of live cattle from Canada last May when a Canadian cow was linked to mad cow disease. One analyst noted the ban cut off about one (M) million cattle usually brought in from north of the border. In 2002, the U.S. imported more than 1.6 (M) million head from Canada. At the end of May 2003, there were less than a third that many.

Analysts now say the long-awaited expansion of the herd will probably be postponed for another year. An ongoing drought led to poor pasture conditions in 2003. And this year, advancing feedgrain prices also could limit herd rebuilding.

The National Cattleman's Beef Association outlook conference projected fed cattle prices in the year ahead would average between $76 and $78 dollars -- at least ten dollars lower than the 2003 average.


Tags: agriculture animals cattle livestock Mad Cow markets news USDA