Thus far, 1999 has offered real encouragement to cattlemen. Fed Choice steers in the Amarillo area moved up $4/cwt. in January but lost some gain later in the month. January, however, still ended $1.50 higher than December.
Feeder cattle and calves consistently improved. By January's end, heavyweight feeders were $7 above the December average.
Look Back On 1998 The recently released livestock statistics for 1998 contained some interesting data.
--- Commercial beef production was up by 1%.
--- Commercial pork production was up 10%.
--- Commercial cattle slaughter was down 2% from 1997, but average live weight was up 3%.
--- Fed cattle marketings from the large commercial feedlots in the U.S. reached 22,678 million head - up by only 91,000 from 1997. The largest fed cattle marketings were in Texas, followed by Kansas and Nebraska.
--- Saleable receipts (cattle and calves) at the 22 public markets were down 16%.
--- During the government fiscal year ending Oct. 3, 1998, only 59.8% of all Quality-Graded beef was Choice, 36.9% was Select.
--- Of all Yield-Graded beef, 48% was Yield Grade 2; 38% was Yield Grade 3.
Cattle Inventory Down 1% The January 1 U.S. cattle and calf inventory totaled 98.5 million head, down 1% from 1998. Texas led the nation with 14.2% of the U.S. inventory.
Total cows and heifers that have calved reached 42.6 million, down 1% from a year ago and 3% below 1997. Beef and milk cows were both down 1%.
The most significant statistic in this latest inventory was the 4% drop in beef replacement heifers. At 5.55 million head, it's an 8% drop from two years ago and suggests a major herd reduction. (Dry pastures forced many Southwest cattlemen to reduce their operation size last summer.)
The 1998 calf crop was estimated at 38.6 million head - 1% less than 1997 and 3% less than 1996.
Placements Tighten Cattle and calves on feed in feedlots of 1,000 head or more totaled 10.63 million on January 1. That's 5% below 1998 but 1% above January 1997. That includes 6.44 million steers and steer calves (down 5% from 1998). Heifers and heifer calves were at 4.14 million, down 4%.
Fed cattle marketings from these feedlots reached 1.81 million head in December - 4% above 1997, 8% more than 1996. Texas registered the most marketings (425,000), a 6% gain over a year ago. Kansas came next with 440,000, exactly the same as 1997.
Placements of cattle and calves into feedlots in December totaled 1.5 million head - 4% below 1997 level and 12% below December 1996. This is up slightly from the lowest monthly placements recorded (February 1998). Traditionally, December is one of the lowest placement months. January is usually slightly higher.
In December, placements weighing less than 600 lbs. were 396,000 head; 600-699 lbs. - 492,000; 700-799 lbs. - 362,000; and 800 lbs. and greater - 246,000.
Each group, except the lightest weights, was greatly below 1997. In fact, the two heaviest classifications recorded some of their lowest placement levels since the data began in January 1996.
What's Ahead For The Markets? The market appears to be heading up. Much lower feedlot breakeven costs have brightened feedlot attitudes. Profits are within sight. The combination of fewer fed cattle marketings and an improved feedlot outlook should help the fed cattle market. This is particularly true moving into spring.
The feeder cattle and calf market is feeling the effects of fewer calves and more bullishness among feedlots. As spring approaches, ranchers will find the feeder market greatly improved.
The amount of strength depends upon more gains in the fed cattle market and general weather conditions. Typically, the majority of calves are sold in late summer and fall. The number available for feedlots in the spring is therefore usually limited.
This year, with even tighter supplies, feedlots may have to pay " big bucks" to get them.