At first glance, it’s kind of surprising that placements into feedyards so far this year are up 3.5%, while available supplies are expected to be down about 3%!
Jim Robb with the Livestock Marketing Information Center (LMIC) in Denver points out there are several contributing factors here. One is that the drought pulled placements forward and altered seasonal patterns. A second factor is that there are fewer cattle being placed in yards that are not surveyed with capacity less than 1,000 head. Thus, more cattle are showing up in the surveys (see a summary of the Cattle On Feed report at beefmagazine.com/market-update).
Many analysts are also predicting that some of the increase in placements are actually being inflated by an increase in cows being placed on feed (this is likely to be very minimal). As always, one has to look at the weight breakdowns to get a full picture and it certainly appears that calves are simply being placed earlier.
The traditional winter-grazing areas in the Southeast and the Southern Wheat Belt remain dry to extremely dry, which will likely continue to force animals to be placed earlier than normal. Some of these lighter calves will likely move to backgrounding programs where there is abundant feed, but others will be placed at lighter weights than normal.
Where everyone agrees is that supplies are very tight and likely to grow tighter. I think an interesting question will be whether supplies will grow so tight as to alter the trend of placing cattle later?
Certainly, gains outside of feedyards will remain extremely competitive. But higher placement weights actually compound the effects of tighter numbers as it decreases overall days on feed.