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U.S. Cowherd to Rebuild, Says Report

Beef cattle numbers in the U.S. are expected to grow by over 3 million in the next three to five years, and will populate in unprecedented areas of the U.S. in the next four to six years, according to a recent report, “Beef Cow Repopulation: The Case for Diversification.” The article was coauthored by Rabobank Food and Agribusiness Research senior analysts Sterling Liddell and Don Close.

Rabobank Food and Agribusiness Research (FAR) and Advisory group reports that the unexpected geography of the U.S. cowherd will include areas of the Southwest, High Plains, and into the Corn Belt.

“The initial growth phase will be relatively quick, and will flatten out,” says Close. “We are going to see the process happen in two phases and in different geographies than we would have a few years ago. The excess capacity in the Southwest and High Plains will fill out first. Once that area has repopulated, rebuilding will occur in the central U.S. – mainly the Dakotas and into the Corn Belt.”

The report finds this new geographic distribution of cattle to be more concentrated, creating a shift in typical areas of production and, as a result, challenging historical models of calf production, feeder acquisition, and crop-producing businesses.

“Once this repopulation is completed, the beef cowherd will have returned to near 2011 levels,” says Liddell. “Although it will depend on factors such as exports and weather, I expect a total of 3.5 to 4 million head more than the 2014 low of 29 million beef cows. Of that total, 1.7 million head will come from newly developed capacity in the central U.S. – areas typically focused on row-crop production.”

Cattle inventory and production in 2014 hit its lowest point since 1996, according to a USDA ERS report, updated on June 24, 2015. Currently, heavier carcass weights have helped offset the small U.S. cattle inventory and supported higher beef prices, but U.S. commercial beef production is expected to fall to a multidecade low of 24 billion pounds in 2015, according to the report.

“From our perspective, our view of the amount of cowherd rebuilding we’re looking for over the next four to six years is quite aggressive,” says Close. “But, the Rabo opinion is that we need to see that additional production in order for the U.S. to be a competitive supplier of beef into the global market.”

Sources: Rabobank; USDA

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