February 24, 2018
By Wes Ishmael
Cattle feeders keep placing more cattle than some expect, according to Friday’s monthly Cattle on Feed report.
There were 2.07 million head placed in feedlots (1,000+ capacity) during January, which was 4.4% more (+87,000 head) than the previous year. Most expected placements to be even with last year or slightly less, given the drought-forced early placements of recent months.
Analysts with the Livestock Marketing Information Center (LMIC) note in the most recent Livestock Monitor that the number of cattle grazing small grains pastures at the beginning of the year (Kansas, Oklahoma and Texas) was 300,000 head (17% less) than a year earlier.
Some also expected rising feedlot breakevens to slow placements.
Heading into the report, analysts with Allendale, Inc. explained, “Finished cattle from January through March are estimated with a $123 breakeven, according to Kansas State University. This increases to $127 and $130 for April and May. From June on out, $120-$124 breakevens are noted.”
In terms of placement weights, 39.9% went on feed weighing 699 pounds or less; 50.4% weighed 700-899 pounds; 9.7% weighed more than 900 pounds.
“In recent months, the number of cattle placed into U.S. feedlots has been bolstered by the large 2017 calf crop, poor small grains (e.g., wheat) grazing conditions in the Southern Plains and rather good demand for animals to put on feed,” say LMIC analysts. “The spike up in placements is a double-edge sword. In the short term, feeder cattle supplies outside feedlots as of Jan. 1, 2018, were calculated to be below a year earlier (down 2.3% or 607,000 head), which tends to support prices.
“However, the placement pattern since last fall has put more slaughter cattle in the marketing window of late-May through mid-August than a year ago. Note that many of those animals are heifers. Those large marketings will likely pressure slaughter-ready steer and heifer prices, which are forecast to be below 2017’s. Those prices suggest dampened demand for feeder cattle late this spring on into the summer months.”
Unsurprising, given the expanding cowherd, was the increased total on-feed inventory and fed cattle marketings.
LMIC analysts explain USDA’s recent Cattle report pegged last year’s U.S. calf crop at 35.8 million. That was 2% more (751,000 head) than the previous year and the largest since 2009. This year began with 1.6% more beef cows than last year.
Total cattle on feed Feb. 1 was 11.63 million head (+848,000 head), which was 7.9% more than a year earlier, which was at the upper end of estimates ahead of the report.
Fed cattle marketing in January of 1.86 million head were 6.1% (107,000 head) more than the previous year.
Incidentally, cattle and calves on feed for slaughter in feedlots with capacity of 1,000 or more head represented 82% of all cattle and calves on feed in the United States January 1 of this year, compared to 81.2% at the same time last year.
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