It's been a while since Mom Nature threw a wrench like this one into the infrastructure of the cattle business.
Starting with last month's first Colorado blizzard that tagged parts of other states, cattle losses began to mount. According to firsthand estimates, death loss in affected feedlots was running 1 to 4 head/1,000 head due to the storm. That was immediate; more losses are expected for the next several weeks due to the extreme stress. This doesn't take into account the cows and calves lost, nor factor in anticipated losses of this year's expected calf crop.
Short-term that should mean fewer fed cattle ready for market than anticipated when those feeders were placed. That's due to death loss and stress-impaired performance. Longer term, it could also further slow herd expansion.
"Boxed-beef prices have jumped sharply the last two weeks, mainly a result of limited availability of fed cattle which has reduced slaughter," Derrell Peel, Oklahoma State University livestock economist, says in his market comments last week. "Packer margins have improved and packers should be aggressively chasing available fed-cattle supplies in the coming weeks. Market-ready supplies of fed cattle have been reduced by death loss and poor feedlot performance. Many feedlot cattle lost weight in the storms and are barely maintaining weight under cold, wet, sometimes muddy, conditions that will continue for some time. Slaughter and carcass weights will be lower for some weeks and January fed-cattle marketings will certainly be less than previously expected."
Higher boxed-beef prices have yet to boost fed cattle though, as packers have reduced slaughter levels (see Markets section).
Add to that the bearish impact of escalating corn prices (see Crops/Weather) and the fact cattle feeders are coming off of their worst year on record.
According to the Livestock Information Center (LMIC), "Average monthly losses per steer sold in calendar year 2006 were about $75/head. For the year, only three months had positive returns (January, August and September) and five sale months had losses exceeding $100/steer."