USDA’s latest cattle on feed report showing placements into feedlots in November were up a whopping 14 percent over last year’s numbers surprised analysts.
But the report is not as bearish as the headlines would suggest, said Derrell Peel, extension livestock marketing specialist with Oklahoma State University.
“In almost every case, the surprise came from feedlots placing a lot more lightweight cattle,” he told Capital Press.
Those lightweight placements are heavily centered in Texas, and that likely carried over into Oklahoma — although the report doesn’t detail Oklahoma placement weights, he said.
Total placements in Texas were up 23 percent in November year over year, with placements of cattle under 600 pounds up 71 percent, the National Agricultural Statistics Service reported.
That’s reflective of poor pasture conditions and feedlots having an incentive to feed cattle, Peel said.
Cost of gain in feedlots is favorable, and wheat pasture in the Southern Plains is in bad shape. Pastures are very dry, and now it’s cold and wheat is going into dormancy, he said.
“Feedlots just went ahead and really loaded up on calves,” he said.
That helped push placements to 2.1 million, 256,000 more than November 2016.
But that’s only half of the story. The other half is that the large number of cattle put into feedlots now means they won’t be available later, he said.
“The first quarter of 2018, there will be less cattle available for placement because we pulled them ahead,” he said.
Larger placements don’t mean there are any more cattle around than everyone was already aware of. Feedlots can’t create cattle supply – a point he stresses over and over again, he said.
“There are only so many cattle out there. All feedlots can do is time the placements; they can’t control overall animal numbers,” he said.
Because so much of the increased placements were light cattle, with a lot under 600 pounds, most of those placed in November won’t come out of the feedlots until May, he said.
That will keep fed markets from getting bunched up, unless feedlots place heavy cattle on top of the lighter weight cattle, he said.
Another thing to consider is with so many calves moving into feedlots in Texas — where it’s dry, dusty and cold — is whether feedlots are going to be dealing with a lot of health issues, he said.
And because cattle placed at lighter weights finish lighter, those lightweight placements should continue to temper carcass weights and beef production, he said.
Peel is expecting beef production to be up 3.7 percent to 3.8 percent in 2017, followed by another 4.5 percent increase in 2018.
Fortunately, demand has continued strong. Retail level prices are equal to where they were a year ago, wholesale prices are holding up, boxed beef prices are back up this week and exports are up for the year, he said.
Total on-feed numbers on Dec. 1 were 11.52 million, up 8 percent year over year and slightly higher than analysts’ pre-report estimates. Marketings of fed cattle were up 3 percent to 1.84 million head.