US feedlot inventories likely are not at a peak just yet, said Oklahoma State University Agricultural Economist Derrell Peel in a letter to Extension agents called Cow/Calf Corner.
There have been some market disruptions that likely delayed, and will delay, calves and yearlings from being placed, Peel said.
TOTAL ON-FEED NUMBERS DIP
The USDA reported Sep. 1 feedlot inventories at 10.98 million head, down 1.3% from a year earlier. This is the first year-over-year decrease in monthly cattle-on-feed totals since December 2016.
A larger-than-expected 9% decrease in August placements pulled feedlot totals lower than expected, he said. The sharp drop partly was in response to the market shocks resulting from the Tyson Finney County plant fire on Aug. 9.
August marketings were as expected at 98.5% of last year, as August had one less business day than 2018.
REGIONAL DIFFERENCES
The September Cattle on Feed report highlighted some regional differences in the feedlot situation among the four largest feeding states, Peel said. The September on-feed inventory in Texas was up 1.9% from a year earlier at 2.73 million head, with August placements up 4.8% from last year.
Kansas’ Sep. 1 feedlot inventory was down 7% from a year ago at 2.34 million head, with August placements down 15%.
Nebraska showed a Sep. 1 on-feed inventory of 2.16 million head, up 1% from last year, with August placements down 7.3%.
Colorado had 0.93 million head of feedlot cattle as of Sep. 1, 3.3% more than last year with August placements down 17%.
TOTALS DOWN
Feedlot placements were down for the fourth straight month in August, and total placements over the last six months, which capture the bulk of the current population of cattle on feed, were down 0.8% from last year, Peel said.
Meanwhile, monthly marketings for the past six months were up 1.0% year over year, he said. Feedlots have continued to market cattle on a timely schedule and maintain currentness.
IMPLICATIONS
However, that does not imply that monthly feedlot inventories have peaked cyclically, Peel said. The short-term disruption of the plant fire in August likely delayed some feedlot placements, while a larger 2018 calf crop and generally good forage conditions now likely means significant numbers of yearlings are still to be marketed in the fourth quarter.
The estimated 2019 calf crop is equal to 2018, meaning plenty of calves will be marketed this fall with feeder supplies ample through 2020, he said. It will likely be a few more months before the market sees sustained year-over-year decreases in feedlot inventories.
Oklahoma feeder cattle prices rose last week with nearby futures rallying to fill the August gap, Peel said. The supportive Cattle on Feed report and growing demand for wheat stockers likely will add further market support in the near term, at least until larger runs of calves and yearlings show up in October.
CATTLE, BEEF RECAP
Cash cattle trade was reported last week at $100 to $104 per cwt, up $1 from the previous week. Dressed-basis trade last week was at $160 to $165, up $1 to $3.
The USDA choice cutout Tuesday was down $1.06 per cwt at $215.39, while select was off $1.18 at $189.66. The choice/select spread widened to $25.73 from $25.61 with 102 loads of fabricated product sold into the spot market.
The CME Feeder Cattle index for the seven days ended Monday was $139.80 per cwt, up $0.12 from the previous day. This compares with Tuesday’s Sep contract settlement of $141.25, down $0.35, and the Oct settlement of $141.65, up $0.40.