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Serving: KS

Fourth Quarter Cattle Data Key to Herd Expansion Picture

Unexpected cow slaughter numbers influence beef prices.

At the start of 2006, cow-calf producers were poised to expand their herds in response to profitable prices the last several years, but a recent increase in cow slaughter has clouded the picture, a Kansas State University agricultural economist says.

Beef cow slaughter so far this year (through late September) has been about 17% larger than during 2005, says James Mintert, agricultural economics state leader with K-State Research and Extension. And this year's beef and dairy cow slaughter combined total has been 10.5% larger than a year ago.

"But totals for the year tend to mask what's really been taking place," says Mintert, who adds that drought and poor pasture conditions sparked aggressive culling in beef herds last summer. As a result, 31% more beef cows went to slaughter in the July-September period this year than during a comparable period last year.

"The big rise in beef cow slaughter has stimulated speculation that the U.S. has shifted from herd expansion to herd liquidation," he says, "but is that really the case?'

Federally-inspected cattle slaughter during the first nine months of 2006 was 4.1% larger than last year. At the same time, steer slaughter rose 5.1%, but heifer slaughter declined 0.4%, both compared with last year.

"The fact that heifer slaughter has been running so far behind steer slaughter suggests that, in some cases, producers have been aggressively culling cows while holding back more heifers," Mintert says.

In years past, the ratio of total female (cow plus heifer) slaughter to steer slaughter has been a good indicator of whether producers were expanding or shrinking the U.S. cattle herd. When the ratio of female to steer slaughter dropped below 1.0, U.S. producers were generally expanding their herds, he says. Conversely, when producers slaughter more females than steers (ratio greater than 1.0), producers were liquidating.

"So far this year, the ratio of female to steer slaughter is 0.833, suggesting that producers are still trying to expand their herds despite drought and poor pasture conditions," he says.

Mintert says, however, that it seems doubtful that producers will be able to ultimately expand the size of the U.S. beef cattle herd this year, given the big increase in cow slaughter.

"Fourth quarter cow and heifer slaughter will ultimately determine what happens," he said. "But the slaughter data from the first nine months of 2006 does indicate that U.S. producers have not shifted into liquidation mode this year."

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