The U.S. cattle inventory was at a 62-year low on Jan. 1, 2012, according to the U.S. Department of Agriculture, which along with record red meat exports has resulted in record high beef and pork prices even as domestic demand has been waning.

In its recent annual Cattle report, the U.S.D.A pegged the total U.S. herd at 90.8 million head on Jan. 1, 2012, down 2% from a year earlier and the lowest since 88.1 million in 1952. The 2011 calf crop (future beef and dairy cattle) was 35.3 million head, the smallest since 1950.

Perhaps most telling was the number of cattle that had calved as of Jan. 1 in Texas and Oklahoma, the nation’s two largest beef cow states accounting for more than 20% of the total. The number in Texas was down 13% from Jan. 1, 2011, and in Oklahoma it was down 14%, compared with the U.S. total that was down only 3%.

The decline resulted from the devastating drought across Texas (the worst in the state’s history), Oklahoma and some neighboring states in 2011 as ranchers liquidated herds due to burned pastures and restrictive costs to bring in supplemental feed.

While the sell-off temp-orarily boosted beef supplies in 2011, the effects of lower cattle numbers now are being realized. Compared with the same month a year earlier, U.S. beef production was up five out of six months in the first half of 2011 but was below year-earlier levels five out of six months in the second half of the year, ending slightly lower for the full year, according to U.S.D.A. data.

In its Feb. 9 World Agricultural Supply and Demand Estimates, the U.S.D.A. projected 2012 beef production at 25,115 million lbs, up 0.6% from its January projection but down 1,084 million lbs, or 4%, from 2011 and compared with a decline of 105 million lbs, or 0.4%, in 2011 from 2010. The U.S.D.A. projected the average steer price to range from 121@129c a lb in 2012, up 5% to 12% from 114.73c in 2011 and up 27% to 35% from 95.38c in 2010.

A key factor in higher 2012 prices was expectations of continued strong exports. The U.S.D.A. projected 2012 beef exports at 2,765 million lbs, down fractionally from its January projection and from 2,779 lbs in 2011 but up 20% from 2,299 million lbs in 2010. Domestic use, meanwhile, was projected at 24,622 million lbs, up 1% from January’s number but down 4% from 2011 and down 7% from 2010. On a per capita basis, domestic consumption was projected at 54.7 lbs, down 5% from 2011 and down 8% from 2010.

Although still dry overall, moisture conditions across the Southwest have improved significantly from 2011, to the point ranchers may begin to rebuild herds.

“Interest in heifers has increased considerably in the last few weeks as drought-affected producers begin thinking about restocking and others begin to expand their cow herds,” the U.S.D.A. said in January. But withholding heifers will actually reduce slaughter cattle (and beef production), and calves from heifers kept for breeding in 2012 won’t be ready for slaughter until 2014, the U.S.D.A. noted.

“Retail (beef) prices in 2012 are expected to surpass 2011 prices,” the U.S.D.A. said. Although by how much 2011 record levels are exceeded will depend on the economy, beef imports and prices for other proteins, the U.S.D.A. said.

For pork the sit-uation has been a bit less complicated as soaring exports appear to have been the primary market feature the past couple of years even as domestic consumption declined amid record production.
Pork production was estimated at 22,759 million lbs in 2011, up 1% from a year earlier and on a monthly basis was above year-earlier levels nine out of 12 months, including the final five months. Production in 2012 was forecast to rise about 2% to 23,235 million lbs, the U.S.D.A. said last week. Slaughter hog prices (barrows and gilts), projected to average between 63@67c a lb, are expected to moderate slightly from 66.11c in 2011 but hold well above 55.06c in 2010.

Domestic pork use was pegged by the U.S.D.A. at 18,470 million lbs in 2011, down 3% from 2010, but is expected to increase 2% in 2012, to 18,892 million lbs, the U.S.D.A. said in last week’s WASDE. Per capita pork consumption in 2012 was projected at 46.5 lbs, up from 45.8 lbs in 2011 but still below 47.7 lbs in 2010.

But the focus remains on pork exports, mainly to Asia. Pork exports were estimated at 5,112 million lbs in 2011, up 21% from 4,224 million lbs in 2010. The U.S.D.A. projected 2012 exports up slightly from 2011 at 5,115 million lbs.

Pork exports of more than 505 million lbs in November 2011 were up about 25% from a year earlier and the highest for any month ever, the U.S.D.A. said.

“Shipments to China made the difference be-tween a ‘strong’ month and a spectacular one,” the U.S.D.A. said. China imported 118 million lbs of U.S. pork in November, the most ever, as the Asian nation sought to offset pork production shortfalls and moderate consumer prices.

The U.S.D.A. expects 2012 Chinese pork de-mand to remain strong and U.S. exports to that nation to hold near 2011 levels.