SPRING HILL, Tenn. – U.S. cattle and calves last month totaled 89.3 million head, 3 percent below the 92.1 million head Jan. 1, 2022, according to the Jan. 1 USDA Cattle Inventory Report, released Jan. 31.

“The National Agricultural Statistics Service (NASS) values lined up fairly well with most pre-report estimates,” said Andrew P. Griffith, University of Tennessee associate professor of agricultural economics. “In general, the official report values exceeded pre-report estimate averages, but only slightly.”

He said the biggest surprise was the report did not show as large of a decline in beef cow numbers as analysts thought would occur.

“I cannot say it was a surprise to me because I wrote an article at the beginning of December that was published the first of January where I predicted beef cow inventory down one million head, which turned out to be correct,” he said.

“Where I missed it was that I had total beef cow inventory 200,000 head higher than where the number came in, and that is because I did not account for the 200,000 head adjustment to the 2022 beef cow inventory value,” he added.

The report said as of Jan. 1, 2023, all cows and heifers that have calved, at 38.3 million head, were 3 percent below the 39.4 million head on Jan. 1, 2022. Beef cows, at 28.9 million head, were down 4 percent from a year ago. Milk cows, at 9.4 million head, were up slightly from the previous year.

All heifers 500 pounds and over totaled 19.2 million head, 4 percent below the 19.9 million head on Jan. 1, 2022. Beef replacement heifers, at 5.16 million head, were down 6 percent from a year ago. Milk replacement heifers, at 4.34 million head, were down 2 percent from the previous year. Other heifers, at 9.67 million head, were 3 percent below a year earlier.

Derrell Peel, Oklahoma State University professor of agricultural economics, said the availability of beef replacement heifers will be a major determinant of what happens in 2023.

“Beef replacement heifers were 17.9 percent of the beef cow inventory, making it the lowest percentage of replacement heifers since 2012,” he said. “The replacement heifer inventory consists of two groups of heifers: bred heifers expected to calve this year, and heifer calves in development to breed this year.

“The number of beef heifers expected to calve in 2023 was down 5.1 percent year over year, the smallest heifer calving total since 2011,” he added. “The implied inventory of heifer calves in development is down 6.9 percent, and lowest heifer calf inventory for the 23 years that the USDA has been providing data on the replacement heifer breakdown.”

Griffith said the driver of higher milk cow numbers was the strong milk prices for 2022.

“That resulted in keeping as many lactating cows in the herd as possible,” he said. “Milk prices have started to decline, which is why milk replacement heifer inventory has declined. But that does not mean the cows currently lactating are not making a profit. Thus, producers are keeping lactating cows in the herd for now, and preparing for lower milk prices later in 2023.”

The 2022 calf crop in the United States was estimated at 34.5 million head, down 2 percent from the previous year’s calf crop. Calves born during the first half of 2022 were estimated at 25.3 million head, down 2 percent from the first half of 2021. Calves born during the second half of 2022 were estimated at 9.16 million head, 27 percent of the total 2022 calf crop.

Griffith said drought and input prices were the two primary factors influencing beef cows and heifer retention.

“Drought was definitely the larger factor,” he said. “Producers are still concerned with forage availability. Despite considerable quantities of precipitation this winter, there remain several weeks before grass begins to grow.

“This means producers are working off the lowest Dec. 1 hay stocks on record, and trying to find a way to capitalize on improving calf prices, which is somewhat in opposition right now,” he added.

Concerning what this means for future expansion, as well as cattle prices climbing at feedlots, Griffith said, “There is no doubt cattle prices will increase, which means expansion is certainly on tap.

“Feedlots and packers will be competing for a very limited number of cattle in 2023, given the calf crop size of 2022,” he said. “The calf crop size in 2023 is expected to be even smaller than 2022. Couple a smaller calf crop with heifer retention the next two years and that means fewer cattle entering the feedlot, and stronger prices.”

Peel said this report confirms the expected contraction in the beef industry, and suggests several implications for the future.

“First, the industry is smaller than it needs to be relative to the domestic and international beef market, and the potential for growth in the beef industry,” he said. “There will be strong incentives to rebuild the cow herd when conditions permit holding heifers and decreasing cow culling,” he added. “That remains the biggest unknown for 2023 as drought conditions persist and additional liquidation may be forced in the coming months if better forage conditions do not emerge this spring.”

He said a second implication is the inventory of replacement heifers suggests significant rebuilding is not possible this year.

“Holding cow inventories steady or to a small level of additional liquidation is the best case for 2023,” he said. “Beef production will decrease in 2023, but exactly how much depends on how feed and forage markets and conditions develop for the coming growing season.”

In Indiana, all cattle and calves as of Jan. 1, 2023, were 790,000 head, down 2 percent from last year, according to State Statistician Nathanial Warenski.

In Illinois, all cattle and calves totaled 1 million head, unchanged from Jan. 1, 2022. In Iowa, all cattle and calves totaled 3.65 million head, down 210,000 head from Jan. 1, 2022.

For Michigan, all cattle and calves were 1.1 million head, down 2 percent from last year, according to Marlo Johnson, director of the USDA Great Lakes Regional Office. In Ohio, all cattle and calves were 1.25 million head, down 5 percent from last year, Johnson said.

In Kentucky, the cattle and calf inventory was estimated at 1.93 million head. Total inventory was down 100,000 head from last year. In Tennessee, the cattle and calf inventory was estimated at 1.68 million head. Total inventory was down 80,000 head from last year.