1/28/2012

WICHITA -- The nation's cattle herd has shrunk to its smallest size in 50 years amid a brutal drought in the Southwest that shriveled pastures and drove hay prices to record levels, a new report said Friday.

In a report that likely foreshadows higher beef prices for consumers at the meat counter, the National Agricultural Statistics Service counted 90.8 million head of cattle and calves in the United States as of Jan. 1. That's 2 percent fewer than last year at this time.

It's the lowest inventory since 1952, when the nation had 88.1 million head of cattle, the agency said.

Kevin Good, senior market analyst for CattleFax, said the government report shows a continuation of a long-term trend that has seen the nation's ranchers liquidating cattle herds 14 out of the past 16 years.

"What has brought it to a head the last couple of years is drought," Good said. "Drought sped that along with massive liquidations in the South -- Oklahoma, Texas, New Mexico his past year -- big declines in beef cow numbers there."

Retail prices at this time last year rose about 10 percent and will likely rise another 5 percent or more this year, he said.

"Now you have a situation where you have tighter supplies at the same time you are exporting more product overseas," Good said. "So it even tightens the supply more for the next couple of years and it means higher prices as we move forward."

Texas still leads the nation with 11.9 million head of cattle and calves, but its numbers fell by 11 percent. Cattle numbers plunged 12 percent in Oklahoma to 4.5 million head. In New Mexico, the cattle numbers dropped 10 percent to 1.39 million head.

The decline was less severe in Kansas, where cattle numbers fell 3 percent to 6.1 million head, according to the report.

"I know of instances of where ranchers culled more deeply than they would normally," said Matt Teagarden, director of industry relations for the Kansas Livestock Association. "There were producers who were scrambling to find hay for cattle."

While the Agriculture Department report contained no big surprises, the decline in total beef cow numbers was a little bigger than many people in the industry expected, Good said.

Beef cows numbered 29.9 million, down 3 percent from a year ago, the agency said. Milk cows numbered 9.2 million, up 1 percent.

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