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Cattle on feed continues downward trend

Carol Ryan Dumas
Cattle supplies remain tight with cattle in feedlots on Nov. 1 down 6 percent from a year ago. USDA's numbers and auction prices reflect fewer available feeder cattlecompounded by heifer retension to rebuild the national herd.

Cattle on feed on Nov. 1 in feedlots with capacity of 1,000 head or more, at 10.6 billion head, was down 6 percent from November 2012 and the lowest November number since 1996.

That shows a continued trend of fewer available cattle, said Derrell Peel, livestock economist with Oklahoma State University.

Some industry observers noted placements into feedlots during October increased 10 percent over last October, he said, but October 2012 placements were an all-time low in USDA’s National Agricultural Statistics Service cattle on feed series.

October is the biggest month of the year for placement, but those placements are still relatively small, he said.

Cattle on feed on Oct. 1 was at its lowest level for October since 1998, followed by November’s 15-year low.

There are just fewer feeder cattle available, and indications are there are fewer heifers going into feedlots, Peel said.

Last month’s cattle on feed report showed an 8 percent decrease in heifers on feed compared to a year earlier, and recent auction reports are showing high prices for replacement heifers, he said.

Cattle producers have attempted to retain heifers for herd rebuilding for the past two years, but drought conditions forced those heifers into feedlots and postponed any rebuilding. Producers are trying even more now and will move forward with rebuilding barring another drought, he said.

That’ll keep the supply of heifers into feedlots tight into 2015 and will reduce the overall cattle available to feedlots, he said.

Prices are already reflecting the short supply of feeder cattle. Prices should be at seasonal lows with spring calves heading to feedlots, but feeder cattle prices have been very strong over the last month and are still strong, he said.

A 500-pound feeder steer at auction is bringing $195 to $205 per hundredweight, and the same weight heifer – which normally sells about 11 percent lower – is bringing as much or more. That’s an indication that producers are retaining heifers, he said.

Heifers at auction in several parts of the country are going for $200 per hundredweight to as high as $240 per hundredweight. In a few cases, they are even selling by the head like bred heifers or cows, bringing $1,100 to $1,400 for a 500 pound to 600 pound animal, he said.

Bred heifers in Oklahoma were bringing $1,600 to $2,200 a head two weeks ago, compared with $800 over the last couple of drought years. Bred heifer and cow demand will taper off now but pick up again in the spring, he said.

Tight feedlot supplies are going to show up in slaughter and beef supplies in the fourth quarter of 2013. Year-to-date beef production is 1 percent below a year ago, but is projected to decline 5.4 percent in the fourth quarter compared with year-earlier production, he said.

Beef production in 2014 will see a very sharp drop, with slaughter down 7 percent and beef production down 6.5 percent, he said.

The tight cattle supply is also showing up in fed cattle prices, which hit a record high of $132 per hundredweight a few weeks ago and holding steady at $130 to $131. Those prices are set to hit a record $135 to $140 by the end of the first quarter 2014, he said.



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