The cattle market in 2014 was a head scratcher, although cattle producers were smiling broadly at the prices they saw. Then comes 2015 and the head-scratching just gets more intense, according to the Oklahoma Farm Report.
Unusual market conditions lead to unusual incentives that result in unusual market behavior. This makes markets unusually difficult to figure out, says Derrell Peel, Oklahoma State University Extension livestock marketing specialist. There is considerable variability in views across the industry about the current and coming fed cattle market for the remainder of 2015. And for good reason; we are seeing extremes in conditions and behavior that are clouding the picture.
Take the Cattle on Feed report, for instance. The April 1 cattle on feed inventory was essentially unchanged from one year ago. However the makeup of that inventory was unique in several respects. The number of heifers on feed was not only down 10.1% from one year ago, it was the lowest quarterly heifer on feed number since 1996. This is not surprising given the anticipated heifer retention and herd expansion that is underway. Fewer heifers in feedlots would naturally suggest that steers make up a bigger percentage of total cattle on feed.
More than that, however, the number of steers on feed actually increased in April, up 5.4% year over year, to the highest quarterly steers on feed total since January, 2008. As a result, the April 1, 2015 steers on feed total was 69% of total cattle on feed, 2.4% higher than one year ago and a new record level. It appears that feedlots have drawn heavily from available steer supplies to maintain feedlot inventories so far this year.
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