High numbers now mean low numbers later

Markets
Mar 30, 2012
art7331

The U.S. cattle on feed rose, as did placements, in February and March. But continued high placements are unsustainable and many project a drop in placements which will result in shorter meat supplies later in summer. Recent rains in drought-stricken areas will also tighten numbers as more heifers are kept as replacements rather than feeders.

Cattle on feed numbers rose 3 percent as of March 1, according to USDA’s National Agricultural Statistic Service’s monthly cattle on feed report. Placements in February also rose 2.8 percent compared to last year. And the number of cattle marketed fell 2 percent.

The results were closely in line with expectations.

On March 1, cattle and calves on feed in feedlots with 1,000-head or greater capacity totaled 11.67 million. This is up 3 percent from last year. March numbers are down from last month’s numbers, with Feb.1 seeing 11.81 million cattle on feed.

Texas, Nebraska and Kansas lead the race in state-by-state cattle on feed numbers. March 1 saw Texas with 2.84 million head, Nebraska with 2.57 million and Kansas with 2.2 million.

Washington saw the big- gest year year-to-year growth in March 1 cattle on feed. At 233,000 233 000 head on feed this year, it saw a 14 percent increase over its 2011 numbers. The largest year-toyear decline was in Oklahoma. With 340,000 head on feed this year, they are down 6 percent from March 2011.

February 2012 feedlot placements totaled 1.71 million, 2.8 percent above February 2011. Net placements were 1.62 million head. During February, placements of cattle and calves weighing less than 600 pounds were 400,000, 600-699 pounds were 335,000, 700-799 pounds were 469,000, and 800 pounds and greater were 510,000. All increases came from the heavier classes of cattle.

The swing towards heavy cattle placements was attributed to backgrounding. Derrell Peel of the Oklahoma State University Extension speculated a lot of small feeding operations have turned to backgrounding.

“The Midwest has traditionally had a lot of farmer freeders. Feeders who feed less than 1,000 head and fly under the radar of the report are switching to running backgrounding programs.”

Tim Petry of North Dakota State University’s Extension program agreed that backgrounding had a lot to do with the heavier animals being placed. He also credited the mild winter in the northwestern states with excellent backgrounding results.

“We expected cattle would stay on grass longer as feed prices went up. That didn’t happen lately because of the droughts on the Southern Plains. But that’s changed around here. The northwestern area had excellent weather for backgrounding. We had an ideal winter, so the cattle just gained weight better than they usually do. They got heavier sooner and gained an exceptional amount.”

Washington led the way in year-to-year placement increases, up 32 percent at 41,000 head in February 2012 versus 35,000 head in 2011. Iowa, Idaho and Nebraska also had large yearto-year placement growth at 20 percent, 19 percent and 17 percent, respectively.

In terms of placement volume, Nebraska dominated the state-wide numbers by placing 410,000 head in February. This is up from 2011’s placement numbers of 350,000. Texas placements held steady with 2011’s February numbers at 380,000 head.

Colorado lost the most year-to-year placement ground with 165,000 head placed in February 2012, down 23 percent from February 2011’s 215,000 head.

Idaho, despite its year-toyear gains, saw the largest month-to-month placement drop. Compared to January’s placements of 47,000 head, Idaho placed 37,000 in February, a 21 percent drop.

Other disappearance in February was at 92,000 head, up 52 percent from last year, and 15 percent from last month. Texas had the largest year-to-year disappearance rate increase at 25,000 head, up 67 percent from 2011.

Both Peel and Petry commented on the volatility of other disappearance in feedlots, pointing out seasonal causes.

“Other disappearance has been very volatile lately,” commented Peel. “And it’s just because of the very unusual things that have been happening lately.”

Peel referenced the drought in the southwestern states, as well as the recent rains in some areas. Petry cited the latter as the primary cause of a good measure of the volatility in disappearances.

“Very much weather related. Everything is coming back to the drought which sent us topsy-turvy in the first place. All the rains caused phenomenal growth on the winter wheat pastures. Cattle who were in lots went back out on pasture. I think that was the main cause of it.”

Marketed cattle fell 2 percent in February to 1.76 million head, down from 1.79 million in 2011. February’s marketing numbers are also down 3 percent from January’s.

Nebraska and Washington were tied for largest year-to-year marketing increases with a 7 percent increase from February 2011 marketings. Nebraska went from 365,000 head marketed in February 2011 to 390,000 this year. Washington went from 30,000 in February of last year to 32,000 this year.

Texas marketed the greatest volume at 415,000 head. This figure is 2 percent higher from February 2011, and head steady with last month’s numbers.

Marketings in Iowa fell 22 percent last month as compared to a year ago, down to 62,000 from 79,000 this time last year. Arizona saw the greatest month-tomonth marketing drop with February’s marketings at 21,000 head, down 30 percent from January’s 30,000.

When asked about his projections for the near future, Peel said he expects to see cattle on feed and placement numbers decline.

“I’ve been impressed at the industry’s ability to find cattle. But it’s a short-run thing. At some point, we can’t do it anymore. As we go through this year, I think we’ll see placements drop. Feedlot inventories will drop.”

“We did see placements higher than a year ago, but we’re running out of cattle,” Petry echoed. “We’re doing everything possible to keep cattle in feedlots, but I expect numbers to decline. I think we’re going to see numbers drop from where they were a year ago.”

The matter of rain in previously drought-stricken areas in the southwest came up. With rains bringing unexpected greening of pastures, more heifers are being retained as replacements rather than feeders.

Peel even mentioned some sales he’d heard of where otherwise feeder heifers were selling as replacements for as much as or more than same-weight steers.

Ultimately, the future numbers of cattle on feed and placements will depend on the weather.

“The handwriting’s on the wall,” concluded Petry. “And weather is the wildcard.” — Kerry Halladay, WLJ Editor

{rating_box}