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U.S. beef supply growing, balanced by stronger demand

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BURLEY, Idaho — The U.S. cattle inventory is growing and beef production is rising, but domestic and foreign demand are keeping things in balance.

The industry is in the building phase of the latest cattle cycle. The cattle inventory was 3 percent higher year-over-year on Jan. 1, 2016, and 2 percent higher at the start of 2017, Joel Packham, University of Idaho extension educator for Cassia County, said during the university’s annual Idaho Ag Outlook seminar.

“The beef industry is growing the beef herd in the U.S. and will continue to do so,” he said.

At the first of the year, the beef cow inventory was 31.2 million head, up 3.5 percent year over year. That number is expected to be up another 700,000 head in 2018 and another 200,000 head in 2019 before flattening out, he said.

The 2017 calf crop, at 36.2 million, is up 3.4 percent and is expected to grow to 37.7 million by 2019 before evening out.

Producers have also continued to retain replacement heifers, increasing those numbers to more than 6.4 million at the start of 2017, up 1.2 percent year over year.

It all adds up to more cattle on feed, which stood at more than 11.3 million head on Nov. 1. Feedlots are keeping current in their marketing and slaughter weights are lower, so there’s not as much beef in feedlots as one might think. But cattle on feed and beef production are rising and will continue to do so, he said.

Commercial beef production in the fourth quarter of 2017 is expected at about 6.7 billion pounds, compared with the average for that time frame of about 6.3 billion pounds for 2012 through 2016.

Beef production is expected higher year over year in both 2018 and 2019 and is projected to reach 7.3 billion pounds in the third quarter of 2019.

But consumption is also up and is expected to increase, he said.

Per capita beef consumption is up 2 percent in 2017 to 55.6 pounds, and it’s projected to rise another 2.6 percent in 2018 to 58.1 pounds. The increase is due to rising U.S. median income, which increased 3 percent in 2016 and another 1 percent in 2017, he said.

“We believe people have the ability to pay for beef and are willing to do that,” he said.

But pork and poultry production are also on the rise, which could be a limiting factor for beef, he said.

Beef exports are a bright spot and are taking care of a lot of the extra beef production. Beef consumption in Japan is up 8 percent, and U.S. exports there are benefiting from tight supplies of Australian beef and high prices on that beef, he said.

But some of that market will dry up when Aussie production recovers due to higher tariffs on U.S. beef, he said.

Total U.S. beef exports were up 9 percent in quantity and 16 percent in value year to date through October, according to the U.S. Meat Export Federation.

While the 2018 export forecast is promising, trade agreements are uncertain. And with beef production increasing, there is no room for error – such as a case of bovine spongiform encephalopathy, he said.

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