USDA’s monthly Cattle on Feed (COF) report can make for some very interesting reading, at least for people who need to get a glimpse of what the fed cattle market and hence, the feeder cattle market, will look like in the months ahead.
Take the October COF for example. Feedlots continued a strong marketing pace in October with marketings up 4.6% year over year, despite one less business day in the month. October placements followed the September monthly decrease with another 5% reduction in placements year over year.
The combination of large marketings and fewer placements left the Nov. 1, 2016 cattle on feed inventory down 1.3% from one year ago. Despite the year over year decreases in placements in September and October, total feedlot placements are up 673,000 head from 2015, a 3.9% increase for the year to date.
However, year-to-date feedlot marketings through October are up an impressive 5.2% year over year, some 855,000 head more than the same period last year. In fact, in the last six months, the year-over-year increase in feedlot marketings has been more than double the increase in the number of cattle placed in feedlots compared to last year.
The faster pace of cattle movement through feedlots has translated in more cattle slaughter and more beef production in 2016 than previously expected. Year-to-date beef production is up 5.3% from last year. Steer slaughter, in particular, has exceeded expectations this fall and is up nearly 7% year over year so far this year, though is expected to moderate to smaller year-over-year increases for the remainder of the year.
Additional steer slaughter, combined with year-over-year increases in heifer and cow slaughter, has pushed total cattle slaughter up 5.6% so far this year. Increased slaughter is partially offset with lower carcass weights since May.
Weekly steer carcass weights have averaged 9 pounds less since May, with heifer and cow carcass weights down about 2 pounds on a weekly average basis. Carcass weights have been down from last year’s record levels despite excellent feeding conditions this fall. Both steer and heifer carcass weights appear to have peaked seasonally the last week of October and should decline for the remainder of the year. The first winter storm which covered the central and northern plains last week may help pull carcass weights down faster in November.
The decrease in feedlot placements in September and October likely means that some feeder cattle are being retained and will be pushed into next year. Certainly there has been plenty of market incentive for cattle to be retained out in the country this fall.
This may result is some additional increase in feeder supplies in 2017 on top of growing feeder supplies due to a bigger 2016 calf crop. Remember, however, that growing domestic feeder supplies are being partially offset by a 29% year-over-year decrease in Mexican and Canadian feeder cattle imports so far this year, totaling 336,000 head fewer imports through September.
These delayed fall feeder cattle are not expected to burden feeder markets excessively unless they get bunched up next spring. However, these retained feeders are being held in a wide variety of stocker and backgrounding programs across the country and will likely be spread out in weight and timing next spring. Wheat pasture stocking has been slow this fall and additional stocker placements on wheat may continue after January 1 as producers look to graze out more wheat acres unless wheat market prospects improve significantly.
Derrell Peel is an Oklahoma State University Extension livestock marketing specialist.