Feedyards found plenty of economic incentive to feed cattle to heavier weights last year, the results displayed in record carcass weights and dismal profits. Weights are likely to increase further in 2016, analysts say, though the pace of growth should slow.
CattleFax data shows carcass weights increased 20 pounds last year. Cattle feeders held onto calves longer in hopes the market would rally when cost of gains averaged $0.75-0.80/lb. compared to a live cattle price of $1.40/lb.
To complicate the situation the swap in price to bring new cattle into feedyards was high, said Kevin Good, senior analyst and fed cattle market specialist.
“All those factors created a back log of big cattle,” Good shared with AgDay during an interview at the Cattle Industry Convention in San Diego.
“It takes time to get out of that situation and it took us all the way to the 4th quarter of 2015 and part of January. Now, we’re finally seeing weights come back down,” Good added.
Severe weather like recent blizzards in the Midwest and Southern Plains will pull back cattle performance, leading to a drop in weights.
Cattle values have fallen since last year too, so the swap on bringing new feeder cattle into the yard has improved.
“These are factors that tell a cattle feeder to pull some cattle forward and get them gone,” Good said of the possible slowdown in cattle weights.
More on AgDay:
Since 1980, the average cold carcass weight has increased an average of 5 lb. each year. There is only a 1 lb. increase estimated for 2016. In 1980, carcasses went across the rail at approximately 635 lb. Today, a carcass weighs about 825 lb.
“The long-term trend is still higher in weights,” Good said. “If we look at this year compared to last year’s record weights we’re going to be pretty flat when the year is all said and done.”
Cattle feeders should expect more calves to be available in 2016 after several years of cow-herd expansion. USDA’s Cattle Inventory Report indicates beef cows and heifers totals were up 3.5% on Jan. 1, 2016.
Good expects one million more head of available fed cattle compared to 2015.
“When they go in the feedyard the markets going to pick back up as well as beef production,” Good said.
CattleFax projections call for feeder calves to average $160/cwt and fed cattle to be around $130-135/cwt for the year.