U.S. Cattle Inventory Drops to Lowest Since 1952 on Drought

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By Elizabeth Campbell


(Updates with analyst comment starting in sixth paragraph.)

Jan. 27 (Bloomberg) -- U.S. cattle inventories fell to the lowest in 60 years after a drought in the South scorched pastures, prompting ranchers to shrink herds.

As of Jan. 1, beef and dairy farmers held 90.77 million head of cattle, down 2.1 percent from a year earlier, the U.S. Department of Agriculture said today in a report. That?s the fewest since 1952. Ten analysts in a Bloomberg News survey were expecting a 1.5 percent decline.

?We had one of the biggest droughts in Texas this past year,? Chad Henderson, a market analyst at Prime Agricultural Consultants Inc. in Brookfield, Wisconsin, said in telephone interview before the report. ?Guys have been ripping up pasture and planting crops. It?ll take years for this thing to build back up.?

Cattle futures in Chicago surged to a record $1.29675 a pound on Jan. 25. Texas, the top state producer, had its driest year on record in 2011, according to the National Weather Service. The drought destroyed pastures, forcing ranchers to sell or slaughter animals rather than incur feed costs driven up by corn, the main ingredient, which reached an all-time high in 2011.

Breeding Herd

The beef-cow herd totaled 29.88 million, down 3.1 percent from a revised 30.85 million a year earlier and the lowest for the date in 50 years, the USDA said. Analysts forecast a 2.6 percent decline. The number of young, female cattle for beef-cow replacement rose unexpectedly to 5.21 million, up 1.4 percent. A 1.8 percent drop was forecast.

The heifers that are being held back will be bred this year and produce calves this year or next, Rich Nelson, the director of research at Allendale Inc. in McHenry, Illinois, said in a telephone interview.

?Those heifers are not in the feedlot, so the short-term supply is actually a little tighter, but we are starting expansion for live cattle hitting the market? starting in mid- 2013, he said.

Cattle futures may open 0.2 cent higher on Jan. 30, Nelson said. The contract for April delivery, the most-active, rose 0.4 cent, or 0.3 percent, to close at $1.2845 a pound today on the Chicago Mercantile Exchange. The price has climbed 15 percent in the past year.

More at http://www.businessweek.com/news/20...ry-drops-to-lowest-since-1952-on-drought.html
 
 
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