Placements down but still higher than average
The most recent USDA monthly Cattle on Feed report which came out August 17 showed few surprises. However, some perspective is needed. Even though placement numbers are down compared to expectations, the numbers are still unusually high relative to the past six years. Some have pointed out the back-to-back high levels of placements in 2011 and 2012 are not going to be sustainable.
Cattle on feed in feedlots with over 1,000-head capacity as of August 1 were up 1 percent at 10.66 million head compared to last year according to the report. Compared to July 1, cattle on feed on August 1 was down 0.5 percent.
Among the three main elements of the report, the number of cattle on feed was spot-on with pre-report industry estimates. The average estimate was that on-feed numbers would be up .7 percent and the unrounded increase of cattle on feed between this August 1’s cattle on feed and last year’s is .7 percent.
State-specific year-on-year increases for cattle on feed came from Nebraska, Iowa and Washington. Large cattle-feeding state Nebraska saw a whopping 13 percent increase compared to August 2011’s 1.98 million head, representing 250,000 head more cattle on feed.
Iowa saw a 9 percent increase of cattle on feed at 600,000 head. Washington, though also not a large cattle-feeding state, saw double-digit gains in its on-feed numbers. Compared to August 2011’s on-feed numbers of 190,000 head, August 2012 saw a 20,000 head (11 percent) increase.
The other big cattle-feeding states of Texas and Kansas saw decreases in their year-to-year cattle on feed numbers. Texas dropped 6 percent—from 2.83 million head to 2.65 million head— in its August 1 on-feed numbers, and Kansas shed 1 percent (20,000 head) to stand at 2.16 million head on feed.
In terms of month-tomonth changes, only Kansas saw increased numbers of cattle on feed August 1 compared to July 1—up from 2.05 million head, a 5 percent increase—and Oklahoma and Washington were steady with their July numbers. All other states reported on declined in their on-feed numbers.
Placements and marketings during July were the big news items of this month’s Cattle on Feed report. Placements were down 10 percent year-to-year and marketings were steady (or down 0.3 percent without rounding). Both were down relative to average industry estimates of down 8.6 percent and up 1.6 percent respectively.
Overall placements of cattle into feedlots of 1,000-head or greater capacity during July shrank from 2.14 million head last year to 1.92 million head this year. However, when considering the placement numbers, it is important to remember the comparison; last summer set records for high placements.
“Recall that last year’s July placements were huge due to the early movement of calves from parched pastures in the southwest,” CME pointed out in their cattle on feed report analysis.
“There are plenty of parched pastures to go around this year but not near as many cattle were placed. It appears that the winner in our “feed prices vs. pasture conditions” battle is feed prices, whose high level very likely kept a good number of cattle out of lots—for now. July placements were 8.5 percent larger than the 2006-2010 average indicating that, while smaller than last year, this year’s movement of cattle to feedlots was still quite large.”
Derrell Peel of the Oklahoma State University’s Extension also sought to bring perspective to the numbers by pointing out last year’s high numbers.
“Both the beef cow slaughter and feedlot placements indicates that the 2012 drought is forcing cow liquidation and early movement of calves but not at the extreme levels of last year.”
State by state, the precipitous drop in placement numbers is not hard to see. With the exception of Nebraska and Idaho, all reported states saw decreases in July-placed cattle. Of the two aforementioned states, Nebraska was the only large cattle-feeding state and saw 410,000 head placed, an increase of 5 percent compared to 2011.
Idaho, relatively small in terms of cattle-feeding states, placed 35,000 head of cattle, up 46 percent from 2011’s 24,000 head placed in July.
“The impact of pasture conditions can be most clearly seen in the state-bystate placement data,” commented CME regarding the data. “Placements in Oklahoma and Texas were 21 percent and 25 percent, respectively, lower than one year ago. Those declines account for 243,000 of the 471,000 fewer cattle placed this July.
“Part of this reduction is due to the simple fact that there are fewer cattle in those states this year but part of it is due to relatively better pasture conditions in much of Texas and a smaller proportion of Oklahoma. Conversely, placements in Nebraska were 5 percent higher this year while placements in Iowa, Kansas and South Dakota were 95 percent, 93 percent and 91 percent as large as last year—smaller but still above the national year-on-year figure, meaning they drove the national number higher.”
Opposing the downward year-to-year movement of placements, month-tomonth placements were up.
July’s placement numbers were 16 percent—258,000 head—above June 2012’s 1.66 million head placed. All reported states save Iowa, Arizona and South Dakota posted placement increases in July compared to June. July placements being above June’s is in keeping with usual placement cycles.
As mentioned, average industry pre-report estimates placed July marketings at up 1.6 percent compared to 2011’s placements.
The reality however was a July placement steady with last year if rounding or down trivially at 0.3 percent without rounding. With 1.913 million head marketed in July, the decline was only a difference of 5,000 head compared with last year’s 1.918 million head. Compared to June placements of 1.97 million head, July’s numbers were down 3 percent.
State-specific marketings in July were mixed compared to the prior year even among the high-volume cattle states. Kansas’ July marketings, at 415,000 head, were 1 percent below 2011’s numbers. At the same time, Nebraska’s marketings were up 6 percent at 440,000 head and Texas was up 1 percent at 475,000 head marketed.
The range of other marketing numbers in the other states ran the gamut of down 25 percent (Iowa, 70,000 head) to up 13 percent (Arizona, 26,000 head and California, 54,000 head). On a month-tomonth comparison, Kansas’ July marketings were steady with June’s, and Nebraska and Texas were both down 5 percent from June’s 465,000 head and 500,000 head respectively. — Kerry Halladay, WLJ Editor