Much has been made of the contribution of Mexican cattle to the US Cattle on Feed report, but just how important is it in the larger scheme of things?
To that end, Brenda Boetel, Extension agricultural economist at the University of Wisconsin-River Falls, examined the question for the Livestock Marketing Information Center’s letter to Extension agents called In the Cattle Markets. This is a summary of her report.
MEXICAN CATTLE IMPORTANT
Mexico historically has been an important source of feeder cattle for US cattlemen, with feeder calf imports of about 1 million head a year since the mid-1980s. Imports grew from 702,000 head in 2008 to their peak in 2012 at 1.44 million.
The largest portion of Mexican cattle imports typically enter the US as feeder calves ranging from 200 to 700 pounds. Lightweight calves are fed a grass diet to gain additional weight before entering a feedlot. These cattle contribute to feedlot placements at varying amounts throughout the year.
This year’s feeder cattle imports from Mexico through October totaled 898,000 head, a 5% increase from the same period in 2017. Mexican feeder cattle imports over the last five years, have been highest in the months of November and December and typically drop off in January. Many of these lightweight calves are turned out on wheat pasture for about 120 days before entering feedlots in March and April.
Feeder cattle imports from Mexico reach a second smaller peak in March and April before dropping off to their yearly lows in August and September.
FOUR-MONTH LAG
US cattle on feed placements through October totaled 19.5 million head, down less than 1% for the same period in 2017. Feedlot placements have been at their lowest points in June and July over the last five years and have been at their highest in October. This October followed the yearly pattern with the highest placements of 2018 to date, at 2.2 million head.
Boetel estimatd Mexican feeder cattle to account for about 5% of monthly cattle on feed placements over the last five years. Assuming a constant lag of four months between when the cattle are imported and when they are placed, Mexican feeder cattle make up the largest percentage of feedlot placements during April when overall placements are low.
That lag between importing and placement can vary depending on grass conditions and the weight cattle are placed. However, even with varying lag times, spring still sees the greater percentage of Mexican placements.
In April 2018 the percentage of feedlot placements made up by Mexican imports was as high as 11% (assuming a four-month lag), the highest of any month since January 2014. Low placements in April 2018 coupled with high feeder cattle imports in December 2017, contributed to the largest percentage of monthly placements in the last five years.
CATTLE, BEEF RECAP
At the Fed Cattle Exchange video auction Wednesday, 219 head of fed cattle sold at an average $117.83 per cwt, up from $116.75 the previous Wednesday.
Cash cattle traded last week late at $118 to mostly $119 per cwt on a live basis, steady to up $0.50 from the previous week. On a dressed basis, cattle traded at $187, up $3.50 to $4.
The USDA choice cutout Friday was up $1.62 per cwt at $214.29, while select was up $2.28 at $200.50. The choice/select spread narrowed to $13.79 from $14.45 with 83 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Thursday, was $145.07 per cwt, down $0.46. This compares with Friday’s Jan settlement of $144.37, up $0.17.