Catle & Corn Comments - July 22, 2013 Back »

June’s Cattle On Feed Report Mostly Neutral

In its monthly Cattle on Feed report released last Friday, USDA reported that there were 10.368 million head of cattle on feed in feedyards with more than 1,000 head capacities in the U.S as of July 1, 2013 (Table 1). That’s 3.2% less than a year ago and close to pre-release expectations. It also marks the eleventh consecutive month of smaller-than-a-year-ago on feed inventory.  As part of a quarterly feature of the monthly report, USDA reported that 63.0%, or 6.527 million head, of the cattle on feed were steers. There were 3.779 million heifers on feed and 62,000 cows and bulls on feed, comprising 36.4% and 0.6% of the on feed total. 

Because USDA didn’t release its semi-annual Cattle Inventory report last Friday as scheduled due to agency budget reductions, determining actual changes in beef cow numbers during 2013 is difficult and will largely remain an unknown until the next report in January 2014.  In the mean time, beef cow slaughter data and the number of cows and heifers on feed can be used to infer changes in the size of the beef cow herd.  As discussed in previous Cattle and Corn Comments, beef cow slaughter was sharply higher than a year ago during March, April, and May.  As of July 1, 2013, the 62,000 cows and bulls on feed represented an increase of 11%, or 6,000 head, compared to a year ago.  While the practice of dry-lotting productive cows and calving in feedyards has become somewhat more prevalent in recent years due to drought and lack of pasture, it isn’t likely that much of increase in the number of cows on feed is being calved.  Instead, they will likely result in boosting non-fed slaughter numbers in the weeks to come.  So, it appears like producers may still be culling some of their oldest cows from their herds.  However, heifer retention interests may have picked up in the last month or so as the number of heifers on feed on July 1, 2013 declined 139,000 head since last year.  That’s a decrease of 3.5% in heifers on feed, whereas the number of steers on feed declined only 3.1%.  Thus, the proportion of heifers on feed comprised slightly less of the total on feed inventory this year on July 1.  If this is a sign of potential heifer retention, it comes after sharply higher placements in March and April, which were likely driven in part by additional heifer placements.

USDA indicated that total placements into feedyards were 1.587 million head in June 2013 (Table 1).  That’s a decrease of 4.6% compared to June 2012 but relatively close to pre-release expectations.  Again last month, the majority of placements were in the heaviest weight categories.  June placements included 625,000 head weighing more than 800 lb, which is a 27% increase compared to last year.  700-799 lb placements were 7% higher than a year ago, while placements of 600-699 lb and less than 600 lb feeders were down 28% and 32%, respectively.  These large changes relative to a year ago are partially a result of sharply higher placements of light-weight feeder cattle last year in response to drought and poor pasture/range conditions prompting early weaning.  With improved pasture/range conditions this year and high corn prices last month, less early weaning has occurred this year and more stockers could be run on summer pasture.

Table 1.

 
USDA Actual
Pre-release Expectations
 
Head (millions)
% of Yr Ago
Average
Range
Placements, June
1.587
95.4
94.9
89.3-99.8
Marketings, June
1.895
96.4
94.7
93.4-95.5
On Feed, July 1
10.368
96.8
97.0
96.0-97.7

 

Occasionally, past Cattle and Corn Comments articles have discussed the regional placement patterns of cattle going into feedyards.  This past year has been more erratic in terms of defining a regional placement pattern due to quickly changing drought conditions, ethanol production, corn basis, and other factors.  To better understand where last fall’s calf crop was placed on feed, Figure 1 shows the proportion of the nation’s calf crop cumulatively placed from October through June either in the Southern Plains states of Texas, Oklahoma, and Kansas or the Northern Plains states of South Dakota, Iowa, and Nebraska.  For the fall 2012 calf crop (labeled 2013 on Figure 1), the Northern Plains states placed 31% of the nation’s calves from October through June while the Southern Plains states placed 48.2%.  This is a very slight decrease for the Northern Plains and a slight increase for the Southern Plains.  Interestingly, this represents the first time in more than a decade when both the Northern and Southern Plains states have leveled off in their trend towards placing more and less, respectively, of the fall calf crop.  As shown in Figure 1, Northern Plains placements have grown from less than 24% in 2001 to 31% in the last two years.  Southern Plains placements have declined from over 52% to about 48%.  While weather and several other factors have driven this trend over the last ten years, the key factor prompting more placements in the north relative to the south has been ethanol production, which has been centered in Iowa, Nebraska, and South Dakota.  While ethanol production caused across-the-board increases in corn prices in both the Northern and Southern Plains, the availability of ethanol coproduct feeds (e.g., distillers grains and gluten feed) partially offset the corn price increase for Northern Plains feeders.  As a result of increased cattle performance for rations containing coproduct feeds and lower per-unit prices than corn, cost of gain often was $10/cwt less in the north than the south.  The slow-down in ethanol production in early 2013 and improvement in the Southern Plains multi-year drought appear to have moderated this trend, at least for this year.  It’s possible that the Southern Plains may increase their proportion of placements of this fall’s calf crop as corn acreage increased in 2013 in many southern plains states, particularly in Texas where corn planted acres are 30% higher than in 2012.

The information in this report is believed to be reliable and correct.  However, no guarantee or warranty is provided for its accuracy or completeness.  This information is provided exclusively for educational purposes and any action or inaction or decisions made as the result of reading this material is solely the responsibility of readers.  The author and South Dakota State University disclaim any responsibility for loss associated with the use of this information.  There is substantial risk of loss in trading commodity futures contracts and traders should consult their brokers for a full disclosure of these risks to determine whether such trading is suitable for them in light of their circumstances and financial resources.

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