The latest USDA Cattle on Feed report indicated that April feedlot placements were down 15 percent from last year. Month to month swings in feedlot placements and marketings are common and any one month does necessarily indicate a trend. However, it is likely that smaller feeder supplies have finally caught up with feedlots and placements are expected to be reduced in the coming months with feedlot inventories declining as we move through the remainder of the year.
Feedlots have seemingly defied the odds by maintaining feedlot placements for several months despite ever tighter feeder supplies. A variety of factors have contributed to the timing of feedlot placements in recent months. What is happening now would likely have happened in 2011 were it not for the drought forced sales of cattle last summer and fall. Even the April placement numbers were likely supported by better than expected wheat pasture that allowed more grazeout this spring. However, wheat pasture, like most forages, was ahead of schedule this spring so many grazeout cattle that would be more typically marketed in May likely were marketed in April. Feedlot placements in the coming months will likely continue to be below year earlier levels. Given generally good current forages conditions in most stocker regions, there will be seasonal availability of early intensive stockers from the Flint Hills/Osage region in July and season-long stockers from other regions in the fall, but overall feeder cattle numbers will be reduced. The number could be reduced further if heifer retention gains momentum this summer.
Larger numbers of Mexican feeder cattle placed directly in feedlots last year also helped to maintain feedlot inventories. Imports of Mexican feeder cattle remain well above year ago levels so far this year as severe drought condition persist across the northern half of Mexico. The current pace of Mexican cattle imports is unlikely to continue for the remainder of the year. Mexican herd liquidation will slow once cattle supplies are exhausted. Although the timing is uncertain, the numbers of Mexican cattle imports will drop significantly for an extended period of time given the depth of herd liquidation currently underway in Mexico.
The complexities and dynamics of the cattle industry never cease to amaze me. Record feeder cattle prices, combined with drought impacts and other factors have helped the feedlot industry wring out the maximum number of feeder cattle over the last several months in order to maintain feedlot inventories. Although it is hard to verify with any data, it seems that the pipeline of feeder cattle typically out in the country has been pulled down to the lowest level in a great many years. Even veal calf slaughter has been reduced to minimal levels as more dairy calves are channeled into feeder markets. The ability to pull cattle forward is impressive and has supported feedlot inventories for many months. But there is a limit and I believe we have exhausted all the tricks to find any more feeder cattle in the short run out of a smaller overall feeder supply.
Source: Derrell S. Peel, Oklahoma State University Extension Livestock Marketing Specialist