A bump in the road for cattle inventory dynamics

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Current forecasts assume normal weather patterns in 2013—i.e., that the drought will dissipate this year. As a result, stocker operators are expected to grow calves on pasture rather than place them prematurely in feedlots. Normal growout of feeder cattle on pasture during the spring and summer would allow stocker operators and cattle feeders to spread placement of feeder cattle in feedlots more uniformly over the year. Stocker operators and cattle feeders will have incentives (higher anticipated prices and lower feeding costs) to place feeder cattle in feedlots later in the year, especially in the fourth quarter of 2013, when expected lower prices for corn and other feeds will follow from harvest of the 2013 crops. Cowcalf producers are also expected to withhold heifers from feeder cattle supplies, thereby reducing feeder cattle supplies that will support cattle and beef prices during 2013. Beef production is expected to decline from 2012 levels.

However, as the drought has continued thus far into 2013, liquidation of cows has remained relatively high. The cow slaughter may add to near-term beef supplies, particularly of processing beef if forage supplies tighten. Feeder calves may continue to be placed in feedlots earlier and at lighter weights than would be the case if pasture conditions allowed them to be grown on pasture rather than on high-priced corn.

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