A lot of cattle are making their way through the system to slaughter, but feedlots are keeping the markets balanced with aggressive and timely marketing.
USDA’s latest cattle on feed report pegged the Dec. 1 inventory on large feedlots at 11.7 million head, up 2 percent from a year earlier and the largest December inventory since 2011.
But placements in November were down 5 percent year over year, and marketings were up 1 percent for the largest November marketings since the statistics series began in 1996, according to National Agricultural Statistics Service.
“All in all, it was a pretty favorable report,” Derrell Peel, extension livestock marketing specialist with Oklahoma State University, said.
While inventory was 2 percent higher than a year ago, the industry started the year 8 percent above year-earlier levels due to relatively big numbers of cattle on feed in 2017, he said.
Feedlots spent the year pulling down year-over-year increases, moderating the rate of increase in beef production. That was especially the case in the last three months, with placements down an average of 5.2 percent September through November, he said.
“Feedlots have done a very good job staying current,” he said.
In addition to moderating increases in cattle on feed, carcass weights are consistent with staying current. After declining in 2017, carcass weights in 2018 were expected to be heavier. They were but not by much, he said.
Lower weights at the end of the year will result in a year-over-year increase of 3 to 3.5 pounds in steer carcasses and 6.5 to 7 pounds in heifer carcasses in 2018, he said.
Despite an increase in cattle coming through the system, feedlots have handled inventories about as well as possible and moved them through in a timely manner. They could have slowed them down, added weight and increased beef production even more, he said.
From a supply standpoint, 2019 will be “more of the same but a little less,” he said.
The industry will still see increased cattle supplies and beef production but not as much as the last three years. He expects the beef cow herd to increase less than 1 percent when the Jan. 1 inventory is reported, he said.
“I don’t see a lot more supply pressure relative to the last three years, but it will continue at a steady pace as we go ahead,” he said.
Beef production will likely peak in 2019. The question is whether it will plateau, drop down or potentially pick up, he said.
“We’re in pretty good shape to plateau this thing. I think it’s sustainable given the strength of demand we’ve had,” he said.