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U.S. cattle on feed continue downward spiral

USDA's latest cattle on feed report shows the declining cattle numbers supporting record-high cattle and beef prices.
Carol Ryan Dumas

Capital Press

Published on July 29, 2014 11:16AM

Record-high cattle and beef prices again received validation from USDA’s latest cattle on feed report showing cattle on feed on July 1 marked the 23rd consecutive month of year-over-year declines.

Placements in June were a bit lower than the trade expected, and marketings in June were the lowest for that month since the USDA series began.

Cattle on feed in U.S. feedlots with capacity of 1,000 head or more on July 1 were down 2 percent year over year at 10.1 million head, and down 248,000 head from July 1, 2013, according to USDA National Statistics Service’s latest cattle on feed report, released July 25.

The number of cattle placed into those large feedlots in June was down 6 percent year over year at 1.46 million, a drop of 96,000 head.

The number of fed cattle marketed during June, at 1.8 million, is down 2 percent year over year, a decline of 33,000 head.

Year-over-year declines in available cattle continue to push prices higher.

Feeder cattle and calves last week sold $3 to $8 higher per hundredweight than the previous week. The direct slaughter market was a full $9 higher, and the boxed beef cut-out gained $8 to $12 per hundredweight, USDA’s Market News reported July 25.

While many in the industry cannot believe the steady run in prices and expect a pushback from consumers at any time, it hasn’t happened yet, and markets are defying the usual seasonal summer downturn.

"Despite attempts by naysayers and techno-chart readers suffering from acrophobia (fear of heights), nothing trumps good ol’ supply and demand when tracking prices for publicly traded commodities," Market News reported.

Market-ready fed cattle supplies are extremely tight, and there is simply a larger desire to own additional levels of beef cattle and products than the current availability -- at every level, the agency reported.

Fed cattle prices set a new record last week of $162.86 per hundredweight for live fed steers, up $6.81 per hundredweight from a week earlier and $42.64 per hundredweight from a year earlier, according to USDA reports.

The daily choice beef cut-out price also broke records last week rounding out at $253.77 per hundredweight, up $3.62 from the previous week and $66.37 from a year earlier.

Last week’s fed cattle and boxed beef prices were phenomenal, said Derrell Peel, livestock marketing specialist with Oklahoma State University.

Numbers in the monthly cattle on feed report were pretty well anticipated, although placements were a little lower than expected. But the report isn’t much of a market-mover, he said.

The on-feed breakdown by weights, however, is worth noting. Feedlots are placing lighter cattle, he said.

Animals over 700 pounds placed in feedlots in June were down 20 percent from a year ago, and lighter weight animals placed are up almost 20 percent. Those under 600 pounds entering feedlots in June were up 27 percent from a year ago, he said.

Those cattle under 600 pounds are going to take a full six months to get to market, further pressuring fed cattle availability, he said.

While placements were strong November through February, there’s been no surge in fed cattle coming on the market. The market seems to have spread out those earlier placements, he said.

The market was looking for a bulge in fed cattle in May or more likely in June or July, but it hasn’t been realized yet and looks like it won’t materialize, he said.

There’s been a lot of variability in placement weights through May, and placements have been down for three or four months. There’s been a lot of incentive to pull cattle forward, and it appears fed cattle are going to be tighter from here on through the end of the year, he said.




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