Tim Petry, Livestock Economist, North Dakota State University Extension Service
The spring feeder cattle marketing season in the Northern Plains is wrapping up, as most backgrounded cattle reached market weights and have been sold to feedlot buyers. Many auction markets are reporting sales volumes at 20 to 30 percent of peak runs in February. And the percentage of heifers selling is outnumbering steers as the heavier weight steers were sold earlier.
Ample moisture conditions in the Northern Plains and favorable calf prices have led to a good demand for replacement quality heifers. Prices for replacement heifers are rivaling their steer weight group counterparts in many cases. For example, last week in Montana both 700 lb. steers and replacement quality heifers were bringing about $137 to $138 per hundredweight. Interest in retaining heifers in the Northern Plains was evident in the January 1 USDA-NASS Cattle Inventory Report, with beef replacement heifers up over 19 percent in Montana, over 12 percent in North Dakota, and over 5 ½ percent in Idaho.
In the April Cattle on Feed Report, USDA-NASS indicated that about 36.4 percent of cattle on feed were heifers, which is the lowest number of heifers in several years. Buyer interest in replacement heifers further complicates the question of how many feeder cattle will be available for feedlot placements in the next few months.
The number of feeder cattle outside of feedlots on January 1, 2011, was reported by USDA-NASS to be down about 3.33 percent from a year ago. Yet feedlot placements were up 4 percent in January, down slightly in February, and up 3 percent in March.
The increased placements so far in 2011 came from several sources. Cattle placed weighing less than 700 lbs. were up over 6 percent, which was higher than many expected given the surge in feed prices. Extremely dry conditions in many parts of the Southern Plains forced calves to move from grazing into feedlots earlier than normal. The dry conditions extend down into Mexico as well. That, coupled with historically high prices, caused more feeder cattle imports from Mexico. For the week ended on April 23, a total of 464,535 Mexican feeder cattle had entered the US; 108,208 more than last year. Many of these feeder cattle likely went directly into U.S. feedlots rather than grazing programs due to the drought conditions.
Furthermore, calf slaughter is down about 15 percent from last year which has resulted in increased placements of dairy calves on feed. Cattle on feed on April 1 in important dairy states included Washington up 23 percent from last year followed by California up 8 percent and Idaho up 7 percent.
It seems likely that at least some of the increased 2011 placements have been the result of placing lighter weight cattle early. So, feeder cattle supplies could be tight for the next few months with lower feedlot placements more in line with what was expected from the lower January 1 inventory.
The fed cattle market continued to exhibit seasonal weakness from the high recorded the first week in April. 5-area fed steer prices on a liveweight basis averaged $116.81 per hundredweight, down $2.48 from the previous week. Dressed weight prices also lost ground to average $186.93, down $4.45 for the week. Choice boxed beef prices declined $2.82 to $184.56 with declining end meats and steady-to-declining middle meats. The Choice-Select spread continued to show seasonal strength moving up 65 cents to $5.83. Feeder cattle prices were mostly steady to $3 higher with a good demand for the lighter supplies available last week. Corn prices in Omaha on Thursday were down 13 cents per bushel from the previous week at $7.12. Corn futures continued to exhibit extreme volatility with about a 30 cent decline on Thursday, and an abrupt over 30 cent upward recovery on Friday. Dry distillers grains in Nebraska increased over $5 per ton to $220.31 with wet distillers advancing 60 cents to $77.50.