The semi-annual USDA Cattle (Inventory) report Friday raised some eyebrows and produced many conversations within the cattle industry about the number of feeder cattle outside of feedlots.
There doesn’t seem to be a good answer at this point, but many think the USDA got it wrong.
The July Cattle report often is considered to be one that confirms the Jan. 1 inventory since so much about where cattle are headed can change in the last half of the year.
But this year, many expected the number of feeder cattle outside of feedlots would be larger because they expected COVID-19 placements to be down.
This reported number of feeder cattle awaiting placement in a feedlot is a quandary, an analyst said.
Another analyst said the USDA is due to release a report on the number of feeder cattle outside feedlots that is expected to shed some light on the issue.
THE BIG QUESTION
Some said the number of feeder calves outside of feedlots reported by Friday’s report, at about 300,000, was far too low since this category was reported at around 650,000 three months ago, and second-quarter placements were below a year ago.
The Livestock Marketing Information Center’s Livestock Monitor said, the semi-annual USDA Cattle (Inventory) report Friday generally was within industry expectations, but the number of beef-breed heifers destined for the feedlots seemed low when compared with an implied backlog of steers.
All cattle and calves, at 103.0 million head, were up only slightly from 109.9 million a year ago, as the number of beef cows (32.05 million) declined slightly (from 32.3 million). Steers weighing more than 500 pounds increased the most, rising 300,000 head, about 2% more than last year.
The quandary led LMIC economists to examine the calculations outside of feedlots.
REPLACEMENT HEIFERS IN QUESTION
The Livestock Monitor said, “One of the more interesting notes on the report was the number of beef heifers in the replacement category and other heifers,” which are not destined for replacement.
“The replacement number was even with a year ago, signifying neither expansion nor contraction,” the LMIC said. “The implied backed-up-on-feed number by the Cattle Inventory report is about 300,000 head, but it was interesting to see that heifers are not showing as large of a backlog as steers, only 100,000 head higher than last year.”
Higher numbers of calves on pastures were thought to be the case, but with drought covering most of the western US, it seemed there may not be enough pasture to support heavy grazing numbers, the Livestock Monitor said.
Friday’s Cattle on Feed report showed a sharp increase in the number of light calves placed on feed in June. There is historical data that would lead to the conclusion that the sharp increase in these placements at this time of year is related to early weaning and marketings from cow/calf producers to ease pasture drought stress.
It will be interesting to watch how it all plays out.
CATTLE, BEEF RECAP
Fed cattle trade was reported last week at $95 to $100 per cwt on a live basis, steady to up $1 from the previous week’s range. Dressed-basis trading was at $158 per cwt, up $1 to down $2.
The USDA choice cutout Friday was down $0.49 per cwt at $201.77, while select was off $0.16 at $190.63. The choice/select spread narrowed to $11.14 from $11.47 with 81 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Thursday was $139.43 per cwt, down $1.47. This compares with Friday’s Aug contract settlement of $142.05, up $0.02.