November 7, 2016 / 10:22 PM / 10 months ago

U.S. cattle herd growth slows despite record corn harvest

* Cattle prices hover near five-year lows

* More breeding animals at feedlots, packing plants

* Corn use to taper off as cattle numbers decline

By Theopolis Waters

CHICAGO, Nov 7 (Reuters) - Demand for corn to fatten up U.S. cattle is likely to climb in the short term, as ranchers send more breeding females to feedlots to reduce the number of calves coming into supply.

But next year, corn consumption could decline as there will be fewer cattle as a result of the current heifer cull.

Ranchers are rushing to reduce their herds as per-pound prices for cattle hover near five-year lows, pressured by plentiful supplies of pork and chicken.

The number of heifers heading to commercial feeding pens rose 4 percent in the quarter ended Sept. 30 from a year ago, according to the U.S. Department of Agriculture. More could be on their way as prices stay low and calves are weaned, analysts said.

"I would anticipate that they (ranchers) are going to cut their herds again because of the financial situation," said South Dakota feedlot operator Herman Schumacher. "It's been a wreck."

Cattle in feedlots are typically fattened to about 1,300 lbs from 800 lbs on arrival, munching through about 7 pounds of feed for every pound of weight gain.

"Feedlots will initially use more grain because they'll have more animals as a stop-off before heading to the packing plants," said John Ginzel, analyst with Chicago-based Linn Group. This would further depress beef prices, he added.

The USDA forecasts corn use for feed will hit 5.7 million bushels in the year that began Sept. 1, up from 5.2 million in the previous period.

That could underpin corn prices, currently languishing near two-year lows around $3.50 per bushel for December delivery on the Chicago Board of Trade.

But reducing the number of heifers will mean fewer calves, which should trim demand for corn beginning in late 2017, given it takes roughly 18 months for a calf to reach maturity.

Ranchers hope they can hang on long enough to see prices for their animals recover as the cutback in supplies works through.

Slaughter prices hit $100.91 per cwt in October - the lowest for any month since January 2011, according to the Livestock Marketing Information Center.

"It's been more than just a little uncomfortable moving to a lower price level, but as our markets adjust to the new price range created in response to current fundamentals there will be some black ink returning for cattle finishers again," said Tracy Brunner, president of the National Cattlemen's Beef Association and also a Kansas feedlot operator. (Editing by Matthew Lewis)

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