USDA Reports Provide Insight into Cattle Markets

Smith: The USDA released the July Cattle Inventory and July Cattle on Feed Reports last week. Bernt Nelson, an economist with the American Farm Bureau Federation, said the two reports offer a good snapshot of the current U.S. cattle industry.

Nelson: The inventory of all cattle and calves in the United States totaled 94.2 million head on July 1st of this year. Now, this was up 200,000 head. This is the first increase in the July cattle inventory dating back to 2018. This is the second increase in beef replacement heifers that we've seen in a row, so this increase represents the first meaningful sign of heifer retention and potential herd rebuilding in nearly a decade.

Smith: He said among the many factors influencing the cattle market is a potential herd rebuild and sustained demand for beef.

Nelson: You know, we've talked a lot about supply here, but if we look at the other side of the equation, we also have demand. Since we hit a high of about $400 a quarter-weight back in June 23, the choice beef cutout value has dropped almost $40 per hundredweight, or about ten percent. Although some of these declines in beef prices are seasonal, this recent weakness raises some questions about whether consumer demand is starting to soften after several years of exceptional strength.

Smith: Nelson said markets will be further influenced by a phased reopening of the border with Mexico, as USDA works to combat New World screwworm.

Nelson: I want to emphasize phased reopening because this is going to be very slow, very gradual. It takes time to get cattle moved up to these ports and prepped and through the appropriate quarantines. But this will slowly help ease some of the feeder cattle supply constraints over time.

Smith: Chad Smith, Washington.