USDA Outlook Report: CATTLE AND BEEF

With feed prices projected to stay stable in 2017, the U.S. cattle herd is expected to head into its fourth year of expansion. USDA's January 2017 cattle report pegged the cow-calf herd at 93.6 million head, 2% higher that month compared to 2016. The beef cow herd also grew 3% to 31.2 million head. According to producer reports, 1% more heifers are expected to be retained in U.S. herds this year, and 1% more heifers are expected to calve. Commercial beef production is set to increase by 3% to 26 billion pounds in 2017, the highest level of production since 2011. Total commercial cattle slaughter is expected to increase by just below 3%, and carcass weights are estimated to increase to just over 828 pounds. Beef exports in 2017 are forecast at 2.72 billion pounds, a nearly 7% hike from 2016. That's slower than the growth trend from 2016, when exports grew by 13%, bolstered by falling prices and a declining Australian herd. Australia is working on expanding their herd in 2017, but "biological constraints" will likely keep any herd growth in check and limit exports that could compete with the U.S. However, a strong U.S. dollar is likely to continue checking U.S. export growth. Beef imports in 2016 declined 11%, due to increased domestic production. That trend is expected to continue into 2017, with imports for the year forecast at 2.74 billion pounds, a 9% drop from 2016, thanks to increased U.S. cow slaughter and lower prices for domestic lean processing-grade beef. The 5-area steer price for Texas/Oklahoma/New Mexico; Kansas; Nebraska; Colorado; Iowa/Minnesota feedlots in 2017 is forecast to average $109 to $116 per cwt, down from 2016's average of $121. Feeder steer prices are pegged at an average of $132 to $139 per cwt, down from $143 in 2016.