Drought impacts Cattle Inventory and Cattle on Feed

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Source: Tim Petry, Livestock Economist, North Dakota State University Extension Service

The USDA National Agricultural Statistics Service (NASS) released both the monthly July Cattle on Feed report for feedlots with capacity of 1,000 head or more; and the semi-annual July Cattle report, which reports the inventory of all classes of cattle including cattle on feed in all feedlots.

The severe drought conditions that impacted the Southern Plains and other Southern states in 2011, and has now spread to much of the major cattle producing areas of the U.S., impacted the numbers in both reports. The Cattle report indicated all cattle and calves in the U.S. as of July 1, 2012, totaled 97.8 million head, 2 percent below the 100 million on July 1, 2011. This is the lowest cattle and calves inventory for July 1 since the series began in 1973. Beef cows, at 30.5 million, were down 3% from last year and this was the 6th straight year of decline. Given the drought situation, and with beef replacement heifers unchanged from last year at 4.2 million head; the beef cow herd will likely be lower again in 2013. The same number of beef replacements the last two years is also the lowest number recorded since the series began in 1973. All categories of non-replacement, feeder cattle and calves were also down. NASS does not report a July 1 feeder cattle supply outside of feedlots category, but LMIC uses the NASS data to compute it.  The feeder cattle supply at 35.7 million head was down 3.2% from last year, reflecting both a smaller calf crop and increased feedlot placements due to the drought. NASS reported that the 2012 calf crop is expected to be 34.5 million head, down 2.3% from last year. Total cattle on feed in all feedlots at 12.3 million were up almost 1% over last year.

Feeder cattle and calf prices are currently being negatively affected by sharply higher, drought impacted feed prices; but the smaller numbers of cattle in the Cattle report will likely be supportive to feeder cattle and calf prices for the next several years.

The Cattle on Feed report tracks numbers of cattle and calves being fed for slaughter in feedlots with capacity of 1,000 head or more. NASS reported just over 10.7 million head on feed on July 1, about 2.7% greater than last year. Note that the Cattle report indicated an increase of cattle on feed on feedlots of all sizes at just under 1%, so more cattle are being fed in the larger lots – a trend that has been discussed in this column before.

Placements in feedlots in June totaled 1.66 million, l.8% below last year’s Southern drought-induced, high level. But since there was one less reporting day this year to place cattle, placements were actually higher than the report indicates. The more widespread drought this year affected placements. The under 600 lb. placement category showed the same placements as last year’s historically high level. And the 800 lb. and over category recorded a 13.6% increase, likely showing increased movement of feeder cattle off from drought inflicted pastures. Marketings of fed cattle during June totaled 1.97 million head, about 6% below 2011.

The Markets

The fed cattle market was lower again last week as the market moves to the seasonal summer low. 5 area fed steer prices on a liveweight basis averaged $112.90 per hundredweight, down $1.75 for the week. Dressed weight prices declined $3.04 for the week to average $178.88.  The choice boxed beef market was lower as wholesale rib eye and loin prices have declined from earlier in the summer highs. Very hot temperatures in much of the country may be affecting domestic consumer demand and weaker beef exports are also a contributing factor. Choice boxed beef prices declined $5.26 for the week to $182.07. Feeder cattle and calf prices traded $4 to $10 lower around the country with seasonally large, drought induced sales at some markets. The corn market continued to advance with Omaha corn prices reported up 68 cents a bushel for the week at $8.12. Distillers grain prices also increased along with corn. DDGS prices in Nebraska advanced $31.75 per ton to $291.45 and MWDGS prices went up $13.20 for the week to $145.90.

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