Expect a smaller U.S. beef and dairy herd and high feed costs in 2013, says David Anderson, Texas A&M AgriLife Extension Service livestock specialist. The latest USDA Cattle Inventory report showed the smallest U.S. cattle herd since 1952 and a 22% decline in Texas cattle numbers over the past three droughty years.

“The 89.3 million cattle in the U.S. on Jan. 1 was 1.4 million fewer than last year,” he says. “Just over 4 million beef cows were reported in Texas on Jan. 1; Texas has lost over 1 million beef cows in the last three years.”

At least, across the U.S., the number of heifers as replacements increased by 2% as compared to the number kept the year before, Anderson says. In Texas, heifer retention was up about 9%. “But … they were not enough to offset the number of cows lost,” he adds. “Most of Texas continues to be in drought and the current drought stretches from South Texas to North Dakota. When we start thinking about rebuilding we have to have our pastures and range in recovery.

“Where are we headed in 2013? I think, again, we will contend with tighter supplies of cattle, high feed costs, but hopefully, drought recovery to go with it.”

Per-capita beef consumption is declining, mostly due to declining beef production and strong beef exports, Anderson admits. But consumers have been paying record-high retail beef prices, so demand may grow as the economy slowly improves. “In the meantime, beef will face tough competition from pork and poultry supplies,” he says.