Cattle and calves in large feedlots in the U.S. totaled 11.7 million on June 1, a 2% increase year over year and the highest June 1 count since the USDA data series began in 1996.
The inventory was up 5% in Texas, the largest cattle feeding state. In other leading states, numbers were up 3% in Kansas and 12% in Colorado but down 4% in Nebraska.
In the Northwest, Idaho and Washington saw an increase in cattle on feed — up 16% and 9%, respectively.
Placements into feedlots during May were down 3% year over year. Marketings of fed cattle out of feedlots during May were up 1% year over year.
The numbers were all pretty well anticipated and close to pre-report estimates, Derrell Peel, extension livestock marketing specialist with Oklahoma State University, said.
Cattle futures markets are down, but not much of that is attributable to USDA’s cattle on feed report, he said.
“The whole protein complex is kind of on its heels,” he said.
It’s just the nature of the futures market. Prices were arguably too high this past winter, and the market is correcting itself. But they are now arguably too low, he said.
Plus reality has set in that farmers didn’t plant a lot of corn, and yields will be down on late-planted corn, he said.
“We’re going to have a lower corn crop than expected. We don’t know how much smaller at this point,” he said.
Typically, acreage is known by now, but that number isn’t available yet. It’s causing a lot of uncertainty in the futures market, mostly for feeder cattle, he said.
Higher corn prices increase cost of gain at feedlots and puts pressure on feeder cattle prices. A lower fed cattle market is another element of feeder cattle futures and is also part of the issue, he said.
As for lower placements, good pasture conditions contributed to that to some extent. All the decreases in placements were in lighter weight cattle and don’t represent a major change in the whole trajectory of the market, he said.
“There may be a little bit bigger run of calves this fall as we come off pasture … it may put short-term pressure on prices,” he said.
But he doesn’t expect lower placements to restrict beef production, he said.
Placements were up in the previous three months and are up 1.3% year over year for the first 5 months of 2019. Marketings were up 1.5% in the first five months of the year, he said.
“We’re just kind of holding steady, moving these cattle as they come to market,” he said.
Seasonal beef demand is the concern. It’s been a cold and wet summer so far, and boxed beef prices have weakened a bit, he said.
“The next couple of weeks are going to be critical as we get into the Fourth of July,” he said.
In addition, the latest data show beef exports were down in the first four months of the year compared to last year. Expectations are for more modest growth, if any, compared to the last few years, he said.