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Ag Census: Cattle, Dairy, Hog Herd All Jump as Producers Build Inventories

Cattle, dairy, and hog inventories all jumped between 2012 and 2017 amid increasing global demand for protein, according to the 2017 Census of Agriculture.

Cattle and calf inventories totaled 93.6 million in 2017, up from almost 90 million a year earlier, the census said. Milk cow inventories were up 3.1% from 2012 to 9.54 million.

The hog herd jumped 9.6% census to census to 72.4 million head, the largest number since 1943, according to data from the USDA.

Favorable economics and strong demand for both beef and pork domestically and from overseas buyers led to the increase in the size of the cattle and hog herds in recent years, said Lane Broadbent, the president of KIS Futures in Oklahoma City.

“The economics show cattle made money the past five or six years,” he said. “We have cheaper feed, so our herd has expanded some.”

Cheap Feed Equals Larger Herd Sizes

Corn futures have mostly stayed below $4 a bushel – other than a few spikes here and there – for much of the past five years, according to data from the Chicago Board of Trade. The average cash price of corn in 2017 was about $3.36 a bushel, USDA data show, allowing livestock producers to pay less than they did in the drought years of 2012 and 2013.

Inventories also may be up in the past five years because the numbers likely were affected by the dry weather in 2012, Broadbent said.

Among the biggest surprises in the census was the almost 10% jump in the size of the U.S. hog herd, which was at its largest in 74 years in 2017, government data show. Broadbent said the hog herd can be grown and shrunk relatively quickly vs. cattle inventories.  

While that’s a lofty level, the size of the hog herd likely will increase in the next few years due to continually increasing demand for pork in China amid the country’s ongoing problem with African swine fever (ASF).

“With every commodity and every year there’s something that’s very important, and right now that important thing is the swine disease in China,” he said. “If that stays away (from the U.S.) then we’ll feed as many hogs as we can.”

Hog Producers Keeping an Eye on China

Like soybean growers, hog producers are keeping a close eye on the seemingly never-ending trade negotiations between the U.S. and China. If a deal is put in place that allows unfettered pork imports into the Asian nation, hog prices could get “stupid” because of the already-strong demand and China’s inability to produce due to the ASF, Broadbent said.

The USDA said in a report this month that its quarterly hogs and pigs data show “continued growth” in the hog sector with record-high inventories on March 1.

“Hog price forecasts were adjusted higher to reflect new information from China indicating important hog losses from African swine fever,” the government said.

Dairy Herd Surprisingly Grows

Also surprising some market-watchers was the increase in the size of the dairy herd since economics haven’t favored the industry in about the past three decades, said Juan Pineiro, an Extension dairy specialist at Texas A&M University in College Station, Texas.

The size of the 2017 dairy herd was the largest in a census year since 1987, the last time the figure topped 10 million head, according to the USDA.

Pineiro said going back to the 1940s, the size of the dairy cow herd has been shrinking consistently. In the past 20 years, however, the number has stayed between 9 million and 10 million head. Because of that, he was surprised to see that the herd was at such a high level in 2017, though it’s still within that range.

Despite the increase in the size of the milk cow herd, the number of dairy farms plunged to 54,599, down from 64,098, the lowest on record, indicating yet more consolidation in the agricultural industry. That’s not a huge surprise as a number of smaller producers are either voluntarily leaving the business or being forced out, Pineiro said.

Still, because a farm is small doesn’t mean it can’t survive, as owners can increase the number of value-added or niche products they produce, he said. Improved technology including robotic milking machines and improved free-stall barns also can help smaller producers stay in business.

“If they have access to those technologies it helps them a lot,” he said.

Consolidation to Continue

Broadbent, whose family still owns a cattle ranch, said along with the size of the hog herd, he expects cattle inventories to continue to rise, but also sees consolidation continuing in the industry as farmers age. Many older producers will probably retire in the next decade, and many of their families likely won’t take over.

“When their fathers and mothers that grew up on the farm get out, and their sons and daughters are lawyers and doctors and teachers, when mom and dad die, they’re going to sell that property to a more efficient producer,” he said.

More efficient producers means improved profitability, which, in turn, likely will mean rising livestock herds, Broadbent said. Smaller ranches always will exist, and the medium-size operators probably will sell to the larger producers.

“They’re either hobbyists or businessmen,” he said. “There’s not going to be any cowboys anymore.”

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