When you’re sitting on top of a horse lunging to escape quicksand, you’re usually not much interested in having your pal point out that the ride on the other side sure looks smooth. Then again, there’s no calculating the value of hope.

In the case of the mucky economic slough that cattle producers are mired in, it’s the supply situation offering light at the end of the tunnel.

First off, there are fewer cows and calves domestically than lots of analysts conjectured ahead of the Jan. 30 semiannual Cattle Inventory Report. The Jan. 1 total for all cattle stands at 94.49 million head, which is 1.6% less than a year ago.

“The real kicker was the downward revision of the 2008 inventory count by another 628,000 head, which actually puts the current report at 2.2% less cattle than previously thought,” say Agricultural Marketing Service analysts. “This is the smallest number of cattle reported in the U.S. in 50 years, when there were 127 million fewer people living within our borders.”

“USDA estimated the U.S. beef cowherd at 31.67 million head, 2.4% smaller than a year ago, while the dairy cowherd at 9.33 million head was up about 1%,” say Livestock Marketing Information Center (LMIC) analysts.

On a percentage basis, the only states with at least 50,000 beef cows reporting an increase in beef cows are: Arizona (+3%), Hawaii (+2%), Louisiana (+1%), North Carolina (+3%), and Ohio (+3%).

“Given higher feedstuff prices in 2008 and the placement of calves at heavier weights, the estimated number of cattle outside feedlots was expected to be larger than last year. As of Jan. 1, the calculated available supply of feeder cattle outside feedlots was 27.6 million head, up about 261,000 head (+1%) from last year,” say the LMIC folks.

According to Cattle-Fax analysts, a decline in cattle inventory means a smaller beef supply and that could bump beef imports to 2.7 billion lbs. for 2009, also encouraged by a stronger dollar that makes the U.S. market more attractive than it was a year ago. Supplies of competing meats also are projected to be lower in 2009, marking the first time in decades that all the major protein supplies have declined. This is happening partly as a result of higher feeding costs in the livestock industry.

Cattle numbers internationally are just as snug, with beef-cow numbers declining in key cattle-producing countries.

At the same time, even with softening domestic demand for beef, worldwide demand for protein is increasing, says Brett Stuart, a Cattle-Fax analyst specializing in exports. While the credit crunch will limit exports to some top markets, U.S. beef exports should post some growth, led by gains in the South Korean market as Mexico continues to be the number-one export destination for U.S. beef (see “COOL’s Bottomless Pit” elsewhere in this issue). For the year, Cattle-Fax projects beef exports will reach 2.3 billion lbs. Taken with net imports, that figure represents an improvement in the beef-trade gap as U.S. exports continue to rebuild from the 2003 BSE incident.

Dan Halstrom, JBS senior vice president for international sales, told members of the Joint International Markets Committee at the recent National Cattlemen’s Beef Association annual meeting in Phoenix that 2008 was a strong year for U.S. beef exports, even though global economic volatility made the final months of the year very challenging. He notes that through the first 11 months of 2008, U.S. beef exports increased 29% in volume and 40% in value over the same period in 2007. When 2008 results are final, he says beef exports will total well over 2 billion lbs. and more than $3.5 billion in value.

The U.S. Meat Export Federation estimates beef exports last year accounted for $134.83/steer and heifer processed. If Japan ever lowers its age requirement for U.S. beef imports, the value would jump about $4/cwt. (fed cattle), Stuart adds.

“People are estimating that a 30-month age limit in Japan could be worth $80-$90/head in incremental value for cattle producers,” Halstrom explains. “But I think it could even exceed $100 if we can get variety meats included. Japan really wants U.S. beef, but we don’t have enough cattle that qualify (current age restriction). It’s a situation that Australia has really been taking advantage of.”