Mt An 2 (7-06) Washington, D.C. U.S. Cattle Supplies and Disposition Released March 24, 2006, by the National Agricultural Statistics Service (NASS), Agricultural Statistics Board, U.S. Department of Agriculture. For information on "U.S. Cattle Supplies and Disposition" call William Weaver at (202) 720-3570, office hours 7:30 a.m. to 4:00 p.m. ET. General For the past 100 years, a well defined cyclical rise and decline has emerged in U.S. cattle production. This cycle typically followed a 10 year course of 6 years of accumulation and 4 years of decrease. However the recent cattle cycle has not followed this trend but rather taken much longer to complete the cycle. This special report examines some of the issues that affected the current cattle cycle. In addition, the report also considers the role and production method of cattle being fed for the slaughter market ; a brief description of survey procedures and sampling methods; and terminology and definitions used in NASS cattle publications. Upturn in U.S. Cattle Cycle Indicated Current and previous year increases in the U.S. cattle inventory support an upturn in the present cattle cycle. A review of the cattle cycle over the last two decades reveals downward trends of 8 years for 1982-1990 and 1996-2004 (Graph 1). However, the most recent downward turn in the cycle decreased at a much lower rate, dropping about 9 million head from the peak in 1996 compared to the previous downward cycle decrease of about 20 million head from the 1982 crest. The trough year of 2004 with an estimated 94.9 million head represents the lowest January 1 cattle and calves inventory since 1959 and is 928,000 less than the trough year of 1990. The January 1, 2006 Cattle and Calves inventory at 97.1 million head is the largest inventory since the 2001 inventory number of 97.3 million, supporting the basis of an upturn in the cattle cycle (Table 1). This was an increase of 1.66 million head over last year and 2.21 million head above two years ago. The beef cow herd is the highest since 2001 and beef replacement heifers were the highest since 1997. The dairy herd buy-out program may have helped to slow the expansion of the milk cow herds to less than 1 percent annual increase compared to 2004. However milk replacement heifers are the highest since 1987 reflecting the growing tendency among dairy producers to replace their milk cows at a higher rate than in the past. Cattle On Feed Prior to the twentieth century, producers primarily used pasture or rangeland to feed their cattle. The proliferation of corn production, especially in the Midwest, provided a profitable alternative feed source for raising cattle. NASS defines cattle on feed as animals being fed a ration of grain, silage, hay and/or protein supplement that will be shipped directly from their current location to the slaughter market. These animals are expected to produce a carcass that will grade select or better. A graphic representation of the factors relating to the NASS cattle on feed estimate is illustrated in Figure 1. As the flowchart indicates, cattle movement is a dynamic process and is affected by the availability of inexpensive corn as well as the suitability of pastureland. If grazing is plentiful and corn prices are high, lighter weight cattle may be shifted from the feedlot to pasture. However, typically cattle will return to the feedlot for finishing. If an area experiences drought conditions, cattle may be placed into feedlots at a lighter weight. The price of cattle may also influence retention as low prices may discourage the marketing (Graph 4) of cattle and may potentially result in heavier than normal cattle at slaughter. Exports and imports are subject to international factors such as disease and tariffs but have traditionally represented only a small portion of the live cattle market in the U.S (Graphs 5 and 6). Information from the January 1, 2006 Cattle on Feed report indicates a heifer retention trend as heifers in feedlots with 1,000+ head of capacity dropped about 3 percent from two years earlier (Graph 7). Heifers as a percent of cattle on feed at 35 percent is comparable to the previous herd rebuilding years, and is lower than the 38 - 40 percent range experienced during the 8 year downturn in the cattle cycle. Both events support an expanding cow herd, fueled by solid market prices and low corn prices. Heifer slaughter has shown declines for the last several years. Heifer slaughter as a percent of total slaughter is at the lowest level since 1996 (Graph 8). For 2005, heifer slaughter as a percent of total cattle slaughter was 30.7 percent and comparable to the heifer/cattle percent of the early nineties when the cow herd was in a building phase. Cow slaughter represented 15 percent of the total slaughter suggesting that producers are retaining cows a little longer in the breeding herd. This, along with heifer retention, suggests that herds are rebuilding. Survey Procedures and Methodology Seventeen states are included in the monthly Cattle on Feed report. These states use a census approach and are responsible for identifying and surveying all known feedlots with 1,000 head or more one-time capacity for feeding cattle for slaughter market. Every year these lists are reviewed and updated to add new operations and to delete operations that are no longer in business. The January and July Cattle reports are based on probability surveys. A probability survey assumes everyone in the target population has a positive probability of being selected. These probabilities don't have to be equal but they must be known and used in the sample selection and survey estimation process. Because a sample is used in the survey process, sampling errors are associated with the numbers. However, since the probabilities of selection are known, sampling errors can be calculated to determine levels of precision. In other words it allows an objective evaluation of the reliability of a statistic. Ideally samples are taken from a complete cattle population. For completeness, the best way to do this would be to select areas of land over the entire United States. The land area of the United States then becomes a sampling frame. Because of the cost of surveying such a huge area, a list of cattle operations is used to supplement the area frame. Although the list is very efficient in targeting operations with cattle, it is never complete since people are constantly going in and out of the cattle business. For this reason both list and area frames are used: the list for efficiency and the area for completeness. NASS increases the efficiency of the sample by grouping or stratifying operations with a similar number of cattle. This reduces the cost of the survey since stratified samples result in smaller samples with the same precision compared to non-stratified samples (Table 2). In the above stratified sampling scheme, the Population Size refers to all cattle operators that have a similar number of cattle. For example, there are 20,200 cattle operators who have between 1 and 99 head of cattle. The sample size for that range is 161. This means that each operator in the selected sample for that particular stratum represents 125 other operators in the total population for that stratum. This representative number, or expansion factor, is simply determined by dividing the population size by the sample size. Although NASS' list of cattle operators is an efficient sampling tool, it lacks the critical element of completeness. For this reason it is supplemented with a sampling frame based on area. Since this area sampling frame covers the complete U.S., and since each of the area units have known probabilities, it is an effective measure of the incompleteness of the list of cattle operations. This multiple frame approach combines both efficiency and completeness for estimating cattle statistics. Cattle on Feed Terms and Definitions Backgrounded cattle: Cattle that are fed a warm up or conditioning ration that are normally fed to approximately 700 pounds and then sold as feeders or shipped to another feedlot to be finished for the slaughter market. Calf: Any animal less than 1 year old. Calves by NASS survey classification are animals that weigh less than 500 pounds. Cattle cycle: A period of time in which the number of beef cattle in the Nation is alternately expanded and reduced for several consecutive years in response to perceived changes in the profitability of beef production. Cattle on feed: Animals being fed a ration of grain, silage, hay and/or protein supplement. For survey purposes these cattle will be shipped from their current location directly to slaughter market. They are expected to produce a carcass that will grade select or better. Young calves fed a high energy ration which are sold and slaughtered as vealers are not considered cattle on feed for slaughter market. Cattle being fed for home use slaughter are to be excluded as cattle on feed. Commercial feedlot: A feedlot whose primary enterprise is to feed cattle and market them for slaughter. Custom feedlot: A firm engaged in fattening or finishing animals on a fee basis. The firm may or may not hold title to the animals. Farmer/Feeder: An operator who typically farms and feeds cattle on the same operation. The cattle feeding part of his/her operation is usually worked around the farming, e.g., feeding cattle before or after crops are planted/harvested, grazing stalks, etc. To be included as cattle on feed, cattle must go from the operation directly to slaughter. Fed marketings: Shipment of cattle out of feedlots to slaughter market for food. Feedlot capacity: The maximum number of cattle that an operator can feed at any one time during the year. Feedlots vacant during the entire year should not be counted, even if the facilities are still intact. Feedlot capacity is the common terminology used by commercial and custom feedlots. Net placements: Placements minus other disappearance. This gives a true indication of actual placements into feedlots for the month. Other disappearance: Movement of animals out of feedlots other than going to slaughter market. This includes death loss, cattle going back to grazing or pastures, and shipments to other feedlots. Peak number: This is the largest number of cattle fed for slaughter during the past 12 months. This terminology is more meaningful for farmer/feeder operators that typically may not have an actual "feedlot." The peak number replaces feedlot capacity in the farmer/feeder states. Placements: Cattle put into feedlots with the intent to be shipped to slaughter, which are fed a ration that will produce a carcass grading select or better. Stockers and feeders: Young steers or heifers, weighing approximately 400-700 pounds. These animals may be on pasture and/or a maintenance or warm-up ration until being put on full feed for slaughter market or being selected as herd replacement stock. Warm-up ration: A cattle ration of grain and/or silage which prepares animals for placement in a feedlot on full feed. These cattle are being "backgrounded" in preparation for full feed. If these cattle will be shipped to another feedlot before going to slaughter, they should be excluded from the cattle on feed inventory until they reach the finishing feedlot. Table 1 Cattle and Calves: Number by Class and Calf Crop, United States, January 1, 2004-2006 1/ --------------------------------------------------------------------------- : : : : 2006 as Class : 2004 : 2005 : 2006 :% of 2005 --------------------------------------------------------------------------- : ------- 1,000 Head ------- Percent : Cattle and Calves : 94,888 95,438 97,102 102 : Cows and Heifers That Have Calved : 42,125 41,920 42,311 101 Beef Cows : 32,861 32,915 33,253 101 Milk Cows : 8,990 9,005 9,058 101 : Heifers 500 Pounds and Over : 19,345 19,573 19,978 102 For Beef Cow Replacement : 5,518 5,691 5,905 104 For Milk Cow Replacement : 4,020 4,118 4,278 104 Other Heifers : 9,806 9,763 9,795 100 : Steers 500 Pounds and Over : 16,277 16,476 16,923 103 Bulls 500 Pounds and Over : 2,206 2,219 2,263 102 Calves Under 500 Pounds : 15,210 15,250 15,626 102 : Cattle on Feed : 13,813 13,745 14,132 103 : Calf Crop : 37,505 37,780 --------------------------------------------------------------------------- 1/ Totals may not add due to rounding. Table 2 Stratified Cattle Sample Example Stratum Population Size Sample Size Expansion Factor (Sampling Rate) 1-99 Cattle 20,200 161 125 100-299 Cattle 15,100 138 109 300-499 Cattle 10,000 125 80 500-749 Cattle 5,000 125 40 750-999 Cattle 2,000 200 10 1000+ Cattle 300 300 1 ACCESS TO REPORTS!! For your convenience, there are several ways to obtain NASS reports, data products, and services: INTERNET ACCESS All NASS reports are available free of charge on the worldwide Internet. For access, connect to the Internet and go to the NASS Home Page at: www.nass.usda.gov. E-MAIL SUBSCRIPTION All NASS reports are available by subscription free of charge direct to your e-mail address. Starting with the NASS Home Page at www.nass.usda.gov, under the right navigation, Receive reports by Email, click on National or State. 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