OU 339

July 23, 1998

The USDA July 1, 1998 cattle inventory, released July 17, 1998 indicated that the U.S. cattle industry continued to decline throughout the first half of 1998. All cattle and calves on U.S. farms and ranches as of July 1, 1998 totaled 107 million head, down two percent from a year earlier and four percent from the 111.5 million head two years ago (Table 1).

 This mid-year inventory estimated the number of cows that had calved in the U.S. beef and dairy herds at 43.3 million head, down two percent from a year ago. Beef cows were down 600,000 head to 34.1 million. Dairy cows were down one percent to 9.2 million head.

Table 1. Cattle and Calves: Number by Class and Calf Crop, U.S., July 1, 1998
Class		1996	1997	1998	1998 as % of 1997
		---------------1,000 Head------------			Percent
Cattle and Calves		111,500	109,000	107,000	98
Cows and Heifers That Have Calved		45,000	44,000	46,300	8
	Beef Cows	35,600	34,700	4,100	98
	Milk Cows	9,400	9,300	9,200	99
Heifers 500 Pounds and Over		17,300	17,100	16,700	98
	For Beef Cow Replacement	5,500	5,300	5,000	94
	For Milk Cow Replacement	3,700	3,600	3,600	100
	Other Heifers	8,100	8,200	8,100	99
Steers 500 Pounds and Over		15,100	14,800	14,500	98
Bulls 500 Pounds and Over		2,400	2,300	2,200	96
Calves Under 500 Pounds		31,700	30,800	30,300	98
Calf Crop		39,776	38,718	37,900	98
Cattle on Feed		9,800	10,900	11,000	101

The USDA survey estimated that the number of heifers (beef and dairy) weighing 500 pounds and over were 16.7 million head, two percent below last year. Beef producers reported holding back six percent fewer heifers for breeding herd replacement purposes than a year earlier. Dairy heifers for replacement purposes were unchanged from the 1997 estimate.

Steers weighing 500 pounds and up were two percent below 1997's numbers. Calves weighing 500 pounds and under were also down two percent. USDA estimated that the 1998 U.S. calf crop will total 37.9 million head, down two percent form last year.

 Though the July 1, 1998, total cattle inventory report indicated that cattle numbers declined, the number of animals on feed in the U.S. continued to increase in June. These feedlot supplies continue to cause concern in the industry.

Table 2: Cattle on Feed : Number on Feed, Placements, Marketings, and Other Disappearances, 1,000 + Capacity Feedlots, U.S. July 1, 1998.
	Number
Item	1997	1998	1998 as % of 1997
	------------1,000 Head----------		Percent
On Feed June 1, 1	9,615	9,703	101
Placed on Feed During June	1,444	1,563	108
Fed Cattle Marketed During June	2,041	2,033	100
Other Disappearance During June 2	60	72	120
On Feed July 1, 1	8,958	9,161	102
1 Cattle and calves on feed are animals for slaughter market being fed a ration of grain or other concentrates and are expected to produce a carcass that will grade select or better.
2 Includes death losses, movement from feedlots to pastures and shipments to other feedlots for further feeding.

Placement of cattle into feedlots during June was eight percent above a year earlier. The majority of calves placed weighed in excess of 600 pounds (83 percent). Heifers and heifer calves accounted for 3.68 million of the 9.16 total head in feedlots in with 1,000 head capacity, up five percent form last year. Steer and steer calf inventory was estimated at 5.45 million head, up one percent. June marketings were equal to lasts year's level and two percent below June 1996's level.

In summary, the July 1, cattle inventory numbers indicate that future beef supplies will continue to decline through the beginning of the new century. This is bright news for the industry. Lower cattle numbers today mean better prices and profits in the future. But, the industry continues to see a short-term feedlot supply problem. Cheap corn and strong competition from pork and poultry producers keep feedlots over crowded and profit margins in the red. This scenario can only spell lower prices for the cow-calf man if the supply problem isn't fixed--and fixed before the fall market period. If we can correct the supply problem (a problem that has plagued the industry since before the start of this year) the future looks profitable for U.S. cattle producers.

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updated 7/28/98