‘The US beef herd is undergoing aggressive expansion’

The US beef herd is undergoing aggressive expansion and this has finally resulted in the halt in the decline of its national herd, according to the AHDB.

According to a recent report from the AHDB,  there are ongoing declines in the numbers of heifers destined for slaughter compared to steers, which indicates that the US beef cow herd will expand.

The numbers of heifers on feed at the beginning of October is down 7% on 2014 levels, but it added that it remains unclear how long the active expansion will persist.

It also reports that US feedlots have found themselves caught in a perfect storm since 2014 as lower energy and feed costs have resulted in feedlot managers paying more for store cattle.

Furthermore, by the beginning of October the US beef price had undergone one of the biggest price declines in its history with prices falling by $50/100 lbs (€1/kg).

As a result, US beef finishers face a serious fall in income with some market analysts estimating that beef finishers are losing $500/head (€469/head), it says.

According to the AHDB, if the US beef price does not improve it could test the industry’s commitment to herd expansion.

However, it has cited some US forecasters who suggest that the beef price will recover to a price of $140/100lbs (€2.86/kg ) by the close of 2015.

It added that feedlots have carried cattle to heavier since 2011, with US carcass weight increasing by 10% on the back of a high beef price and abundant feedlot capacity.

This increase in carcass weight has helped offset the 6% reduction in cattle slaughterings, with the total production falling by just 4%.

However, these heavier carcasses are part to blame for the recent decline in prices to date with heavy cattle still continuing to come into the markets, says the AHDB.

The rally in the US dollar over the past 18 months is also impacting on the trade, as a result US exports may be at a disadvantage in the medium term, it says.

Shipments of US beef has also dropped with lower quantities being exported to Japan, Mexico and Canada.

The AHDB also reports that import volumes to the US have also increased largely driven by an increase in volumes from Australia and New Zealand.

This now means that the US is a net importer of beef with imports sitting at 1.1m tonne, which represents a five-fold increase compared to the same period in 2014.