The US Department of Agriculture issued its annual Cattle Inventory Report on Friday, indicating a continued decline in the US cattle herd, but also hinting that cow-calf operators may be starting to rebuild herds for the future.

The report put all grown cattle and calves in the US at 87.7 million head, down 1.8 percent from a year earlier and the smallest total since 1951.

The beef cow inventory, at 29 million head, was down 0.9pc from last year and the smallest beef cow herd since 1962.

Steiner Consulting’s Daily Livestock Report, noted, however, that the reduction was smaller than expected, meaning the herd size might turn upward more quickly.

The other positive indicator in the report was the inventory of beef replacement heifers, which was up 1.7pc from a year ago. While analysts were expecting a larger increase, it was still a rise, nonetheless.

Oklahoma State University extension livestock marketing specialist Derrell Peel told MeatingPlace.com that the number of beef replacement heifers as a proportion of the beef cow herd, at 18.8pc, was the largest in more than 20 years, including the last cyclical industry expansion in the early 1990s.

In the Cow Calf Corner newsletter, Mr Peel noted that among the top ten beef cow states in the US, beef replacement heifers were up in seven states. The result was a net increase of beef replacement heifers of 4.1pc percent among top ten states.

Only Montana, North Dakota and Kentucky had fewer replacement heifers compared to last year while Texas, Missouri, Oklahoma, Nebraska, South Dakota, Kansas and Arkansas had an increase from 2013. Oklahoma led the increase among states with 45,000 more beef replacement heifers, an increase of 16.1pc year-on-year.

Market signals for expansion were strong and growing, and the industry was poised to respond, Mr Peel noted, but he also warned the US industry remained quite vulnerable to drought conditions that could re-intensify this spring and postpone herd expansion once again.

“We know what we want to do; we just don’t know whether Mother Nature is going to let us do it,” he said.