The December Cattle on Feed report was supportive to 2021 cattle markets, showing the US cattle industry is back where it started a year ago with Dec. 1 feedlot inventories about equal to last year, said Oklahoma State University Extension Livestock Marketing Specialist Darrell Peel in a newsletter to Extension Agents called Cow/Calf Corner.
November placements were down 8.9% from one year ago, he said, while marketings were down about 2%. The numbers were anticipated, though the low placements may be viewed as mildly bullish.
FEEDLOT DYNAMICS CHALLENGING
Feedlot dynamics this year make it a challenge to determine exactly what is going on in fed cattle markets, Peel said. Monthly placements have varied from 23% down year over year in March to 11% higher in July, to 11% lower in October.
From January through November, total placements were down 4.4% from last year, he said. In the last six months, which would include the majority of current feedlot inventories, placements were 0.5% more than the same period last year.
Feedlot marketings also were volatile this year with monthly marketings varying from 13% more than last year in March to 27% fewer in May and back to 6% more in September, Peel said. Through November, total 2020 marketings were down 3.1%, and in the last six months, they were fractionally more.
2021 FEEDLOT FLOWS MORE CONSISTENT
Flows of cattle through feedlots should begin to show more consistent tightening in 2021, he said. The beef cowherd peaked in January 2019 and led to a 2019 calf crop that was down 0.7% from the 2018 peak.
The estimated feeder cattle supply on Jan. 1 was down 0.4% from 2019, Peel said. The estimated 2020 calf crop in the July Cattle report was down another 0.7% from 2019.
The July estimate of feeder cattle supplies was up slightly but likely was pushed higher by the intra-year dynamics of feedlot placements, he said. Current estimates suggest the 2020 total calf crop is down 513,000 head from the 2018 peak.
Total female slaughter is an aggregate indication of herd dynamics, Peel said. So far this year, weekly average female slaughter percentage has equaled last year suggesting modest additional liquidation.
Year to date heifer slaughter is down 3.7% from last year, and total cow slaughter is down 1.3%, with dairy cow slaughter down 5.3% and beef cow slaughter up 2.7%. Total cattle slaughter is down 2.8% and is expected to decline again in 2021, he said.
So, with herd inventories continuing to drift lower, total numbers should be generally supportive of cattle prices in 2021, Peel said.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains last week at $110 per cwt on a live basis, up $2 to $5 from the previous week. Dressed-basis trade was at $172, up $6 to $7.
The USDA choice cutout Wednesday was down $3.13 per cwt at $207.54, while select was off $1.66 at $197.93. The choice/select spread narrowed to $9.62 from $11.08 with 92 loads of fabricated product and 27 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.21 a bushel over the Mar CBOT futures contract, which settled Thursday at $4.50 1/2 a bushel, up $0.03 1/4.
No cattle contracts were tendered for delivery against the Dec contract Thursday.
The CME Feeder Cattle Index for the seven days ended Wednesday was $139.82 per cwt, down $0.17. This compares with Thursday’s Jan contract settlement of $140.92 per cwt, up $0.65.