Cattle on feed gains another 2 percent

Mar 2, 2012

U.S. cattle numbers have declined 14 of the last 16 years, with the addition of 2011. The severe drought has increased the reduction of cattle numbers, sending feeder cattle to market at lower and lower weights, resulting in less beef per animal, including less Choice grades. Analysts predict the trend will continue to send consumers’ beef prices higher in 2012.

USDA’s February Cattle on Feed report pointed to the tighter and tighter cattle and beef supplies that will boost beef prices. While the report didn’t have any huge surprises, it was considered somewhat bullish by analysts.

On Feb. 1, cattle and calves on feed for slaughter market in the U.S. for feedlots with a capacity of 1,000 or more head totaled 11.8 million head, up 2 percent from the Feb. 1, 2011, inventory, according to USDA’s National Agricultural Statistics Service.

“The trade was expecting about 2½ percent more cattle on feed, so the actual number could be considered friendly to prices,” said Tim Petry, livestock economist, North Dakota State University Extension.

During January, feedlot placements totaled 1.85 million, 2 percent less than the January 2011 total. Net placements totaled 1.77 million head. Totals of placements of cattle and calves weighing less than 600 pounds during January were 445,000; 600-699 pounds, 430,000; 700-799 pounds, 525,000; and 800 pounds or more, 447,000.

“The number of cattle on feed remains above year earlier levels even though the 2011 calf crop was 1 percent smaller. But many more lightweight calves were forced off grazing and into feedlots during last summer and fall due to the record drought in the Southern Plains,” Petry said.

“This was the second straight month of below year earlier placements, and a trend that could continue given that there were about Cattle on feed (from page 1)

4 percent less calves and feeder cattle outside feedlots on Jan. 1. The only weight category that showed an increase in placements over last year was in the 800 pounds and over category,” he added.

“Ideal weather, warmer than normal and a lack of snow, for backgrounding cattle in the Northern Plains likely contributed to the increase. Faster gains have meant feeder cattle reaching market weight earlier and the higher prices are also stimulating sales from backgrounding lots.”

Also during January, fed cattle marketings totaled 1.82 million, 2 percent more than the January 2011 total. Other disappearance during the month totaled 81,000, 42 percent more than January 2011.

Jan. 1 cattle and calves on feed for slaughter market in the U.S. for feedlots with capacity of 1,000 or more head represented 84 percent of all cattle and calves on feed in the U.S., an increase from 82.2 tallied on Jan. 1, 2011.

During 2011, fed cattle marketings for feedlots with a capacity of 1,000 or more head represented 87.7 percent of all cattle marketed from feedlots in the U.S., which is an increase from 84.6 percent posted one year earlier.

“The combination of higher than expected marketings and lower placements impacted the size of the overall inventory, according to CME reports.

“In recent months there has been somewhat of a discrepancy between the marketing numbers reported by the feedlot survey and the slaughter data coming from NASS. The monthly slaughter data shows that steer heifer slaughter in January was 2.051 million head, down 1.9 percent from the previous year. Steer slaughter at 1.285 million head was up 0.2 percent vs. January 2011 while heifer slaughter at 766k was down 5.2 percent,” CME reports point out.

“The discrepancy may reflect changes in feedlot industry structure, whereby some smaller feedlots either closed down or grew in size and now are being captured in the feedlot survey which polls only feedlots with 1,000 head of cattle on feed,” CME reports.

Following the report, cash cattle traded late on Feb. 24 in Texas at steady to 50 cents lower at $129. Kansas cash cattle traded steady to $1 higher at $128 to $129 and Nebraska cattle sold at $127 to $128, steady to $2.50 lower.

Wholesale beef prices improved that Friday by 56 cents to $197.42, and were up more than $6 in a week, but packers continue to operate their plants in the red.

The total number of U.S. beef cattle has declined 14 of the last 16 years, with 2011 marking the sixth consecutive year of weakening numbers and the longest consecutive decline in history, said Tom Troxel, Science for the University of Arkansas System Division of Agriculture.

“What does this mean to the consumer? USDA says beef and veal prices climbed by as much as 9 percent in 2011, and the agency projects that costs will rise an additional 4.5 to 5.5 percent in 2012,” Troxel said, adding that the higher prices for beef will affect consumer purchasing decisions.

“Restaurants are projecting that food prices will climb by about 4 percent in 2012, about the same amount as in 2011,” he said. “Still, restaurants are expected to continue a trend toward smaller cuts of meat and price increases that will be watched closely by customers.”

USDA also released the United States and Canadian Cattle and Sheep report last month, documenting cattle inventory numbers for both the U.S. and Canada along with combined numbers.

All cattle and calves in Canada on Jan. 1 totaled 12.515 million head, up 0.5 percent from last year. Beef cows were at 4.228 million head, down 1 percent from 2011. “To put Canada’s beef cow herd in perspective, Texas had 4.365 million head on Jan. 1, 2012, after liquidating 660,000 beef cows due to drought. Beef replacement heifers in Canada at 554,300 were up over 4 percent, signaling similar interest in herd rebuilding that is occurring in the Northern U.S.,” Petry said.

Steers over 1 year and calves under 1 year were up about 2 percent, or 82,200 head in Canada. “This was not surprising as cheaper feed costs in Canada caused reduced feeder cattle exports and more imports,” Petry said.

Canadian feeder cattle exports to the U.S. were down over 60 percent in 2011, and imports of U.S. calves during the September-December calf marketing season were up over 50 percent, according to Petry.

The combined U.S. Canada calf crop was down almost 1.4 percent from the previous year. — Traci Eatherton, WLJ Editor