Cattle Supplies Remain TightCattle Supplies Remain Tight
Patterns of feedlot placements and slower fed cattle marketing contributed to the first year-over-year increase in feedlot inventory (Nov. 1) in more than two years, but cattle supplies remain historically snug.
November 29, 2014
Last Friday’s Cattle on Feed report surprised some with feedlot inventories 0.5% higher than the previous year at 10.59 million head, the first year-over-year increase in more than two years.
“Turning fewer cattle into larger feedlot inventories is the result of feedlot decisions about both placements and marketings,” says Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in his weekly market comments.
On the placement side of the equation, Peel explains placements of cattle weighing 700-799 lbs. comprised the smallest percentage of placements the past five months.
“In other words, feedlots have placed heavy feeders (>800 lbs.) to the extent available and otherwise have been placing lighter-weight cattle that will stay on feed longer, thereby maintaining feedlot inventories,” Peel explains.
Although October placements were 0.9% below the previous year, analysts with the Livestock Marketing Information Center (LMIC) explain placements were 1.5% lower on a net basis.
“Besides being marketed to packers, cattle exit feedlots for many reasons (death loss, shipment to other feedlots, incorrect inventory designation, etc.). USDA reports those animals as ‘other disappearance,’” LMIC analysts explain. “That statistic was rather large in the latest report.”
Feedlots also increased inventory by slowing marketing the past few months.
Marketings in October of 1.69 million head were 8% less than the previous year.
“The slow feedlot marketing rate is reflected in increased steer and heifer carcass weights in recent weeks, currently at record levels of 903 lbs. for steers and 830 lbs. for heifers, both up 26 lbs. from last year,” Peel explains. “Kansas feedlot data confirm that the combination of lightweight placements and heavier marketing weights is slowing down feedlot turnover rates. Days on feed for steers and heifers were up roughly 15 days in August and 21 days in September.”
Still, LMIC analysts point out, “By historical measures, the on-feed count remains small. However, the number of cattle marketed by feedlots in 2015 will not post large year-on-year declines.”
“Despite the modest increase versus year-ago levels, the main issue in the fed cattle market is the fact that forward contracts hold a premium and provide feedlots with an incentive to feed cattle to heavier weights,” explained Steve Meyer and Len Steiner in their Daily Livestock Report on Monday. “This has slowed down the flow of cattle. Feedlot inventories are slowly increasing but it is unclear how much of the cattle currently being placed on feed are for sale to packers and how many heifers are being placed in breeding programs. This could skew the overall expected supplies for next spring and summer. Taking the report at face value, we should expect more cattle to become available in late winter and spring.”
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