The January 1, 1997, USDA Cattle Inventory provides confirmation that the cattle cycle has turned around and we are starting the recovery phase. The report estimates total cattle and calves on farms and ranches in the United States to be 101.2 million head. This is a 2% decline from the January 1, 1996 estimate (Table 1). The USDA number is right in line with most industry expectations.

Table 1. Cattle and Calves: Number by Class and Calf Crop: Million Head¹

Class	1995	1996	1997	1997 as % of 1996
	- 1000 Head -			percent
Cattle and calves	102,755	103,487	101,209	98
Cows and heifers that have calved	44,643	44,644	43,561	98
Beef cows	35,156	35,228	34,280	97
Milk cows	9,487	9,416	9,281	99
Heifers 500 pounds and over	19,891	20,232	20,306	100
For beef cow replacement	6,475	6,179	6,051	98
For milk cow replacement	4,141	4,104	4,037	98
Other heifers	9,275	9,949	10,219	103
Steers 500 pounds and over	17,463	17,732	17,315	98
Bulls 500 pounds and over	2,390	2,392	2,339	98
Calves under 500 pounds	18,369	18,488	17,688	96
	1994	1995	1996	1996 as % of 1995
Calf crop	40,059	40,211	39,586	98
1 U.S.D.A. January 1, 1997 Cattle Inventory

This decrease in cattle inventory numbers will have a definite beneficial impact on cattle prices this year and for the next several years. Three factors carry the greatest weight in determining calf price; the price of fed cattle, the price of corn and the number of animals (inventory) in the marketplace. All three of these factors now point toward better times in the beef industry.

The inventory estimates indicate a smaller beef supply is coming from a reduced 1996 cow herd and calf crop. These numbers also suggest that beef supplies will be lower in 1998 and beyond. The number of beef cows on U.S. farms and ranches on January 1, 1997 was estimated to be 34.3 million head, down 3% from the 1995 January 1 estimate.

The number of beef replacement heifers ready to enter the cowherd also is estimated to be lower. Beef heifer replacements are estimated to be 6.05 million head, 2% and 7% below 1996 and 1995 January estimates, respectively. Heifer statistics are important in anticipating cow herd expansion potential. This estimate suggests that producers are still reducing cow herd numbers.

The reduction in beef cow numbers and lower heifer retention estimates means that the profits are squeezed out of the cow-calf segment of the industry. In 1996, beef producers reduced their cowherds in an effort to turn the cattle cycle around and get the industry back to profitable levels. It worked. This is great news for Carolina beef producers. Their efforts have certainly helped. While 1997 might not return profits to the cow-calf segment, it does signal profitable times are in the future. "The best cure for low beef prices is low beef prices."

Steer inventory numbers support the estimate that the large beef supply seen in 1996 will continue to decline in 1997. The inventory class of steers weighing 500 pounds and over is estimated at 2% below the 1996 number. The class of "calves under 500 pounds" is 4% below last years' level. These estimates suggest that the number of animals being fed in 1997 will be below 1996 levels.

The 1996 calf crop estimates also support the evidence that the beef supply will be smaller throughout the rest of the decade. The total calf crop estimate for January 1, 1997 is 39.586 million head, down 2% from 1995. This is the first time in the 1990s that this calf crop estimate has declined.

BEEF COW ESTIMATES BY AREA OF THE COUNTRY

The U.S. beef cow herd decreased about 3% in 1996. Southern states beef cow numbers decreased by 4.18 percent; 1% greater than the U.S. average. Cow numbers declined by over 5% in Alabama (-7.68%), Texas (-7.49%) and Tennessee (-6.47%). States with declines greater than 3%, but less than 5%, are: Mississippi (-3.67%), Kentucky (-3,33%) and Florida (-3.25%). Some showed a slight increase or stayed relatively the same as last year's estimates: Arkansas (+0.02%), North Carolina (+3.64%), South Carolina (+0.00) and Virginia (+1.09). Beef cow numbers, in the Western states, increased slightly (+.06%) while beef cow estimates declined in the Midwestern states by 1.71 percent (Table 2).

Table 2. Beef Cow and Replacement Heifers Inventory Numbers by Selected States.

	Beef Cows (1,000 Hd.)				Replacement Heifers (1,000 Hd.)
State	1996	1997	% Change		1996	1997	% Change
Southern States:
Alabama	898	829	- 7.68		155	138	-10.96
Arkansas	952	954	+ 0.02		195	190	- 2.56
Florida	1,105	1,072	- 3.25		155	155	+ 0.00
Georgia	710	692	- 2.53		115	118	+ 2.61
Kentucky	1,200	1,160	- 3.33		205	190	- 7.32
Louisiana	551	547	- 0.73		97	93	- 4.12
Mississippi	708	682	- 3.67		149	130	-12.75
North Carolina	494	512	+ 3.64		125	113	- 9.60
Oklahoma	1,983	1,965	- 0.91		390	360	- 7.69
South Carolina	249	249	+ 0.00		46	47	+ 2.17
Tennessee	1,160	1,085	- 6.47		260	210	-19.23
Texas	5,900	5,460	- 7.46		860	880	+ 2.33
Virginia	732	740	+ 1.09		125	130	+ 4.00
Total Southern States	16,642	15,947	- 4.18		2,877	2,754	- 4.28
Western States	4,229	4,254	+ 0.06		847	882	+ 4.13
Midwestern States	8,235	8,094	- 1.71		1,260	1,230	- 2.38
Total U.S.	35,228	34,280	- 2.69		6178	6051	- 2.06

BEEF HEIFER REPLACEMENTS BY AREA OF THE COUNTRY

Replacement heifer estimates for the U.S. were estimated at 6.05 million head. This is a 2% decline from 1995 estimates. Southern cattle producers indicated that their retention level was down 4.28 percent over 1995 numbers. This is about 2% above the national estimate. Texas (-19.23%), Mississippi (- 12.75%) and Alabama (-10.96%) lead southern states in the percentage decline in beef heifer replacements. Virginia (+4.00%), Georgia (+2.61%) and South Carolina (+2.17%) cattle producers indicated an increase in heifer retentions. Western cattlemen indicated they were increasing heifer retentions at a rate of 4.13 percent above the 1995 level. Midwestern states, like their southern neighbors, indicated a decline in heifer retention of 2.38 percent.

NUMBER OF BEEF COW OPERATIONS IN THE U.S.

The number of operations with beef cattle in 1996 totaled 1,194,390, down 1% from 1995, and 1% from 1994 estimates. Across the southern region, the number of operations with cattle and calves increased by 13,000 farms in 1996. Five southern states: Alabama, Arkansas, Florida, Georgia and South Carolina indicated declining numbers of operations in their states. Mississippi, Oklahoma and Virginia indicated a net gain in beef numbers. Kentucky, Louisiana, North Carolina, Tennessee and Texas indicated no change in the number of beef operations in 1996.

SUMMARY

The January 1, 1997, cattle inventory is good news for South Carolina and U.S. cattle producers. Beef inventories are declining signaling that the industry is on the rebound. While 1997 returns will still be negative for most beef operations, better times are ahead for 1998 and beyond.

Management Marketing Memo index   Ag Econ Home