April Kansas Feedlot Sales Drop

The number of fed cattle Kansas feedlots sold to packer buyers in April dropped more sharply than normal as managers tried to take advantage of packer demand and get ahead of what seemed to be lower prices to come.

The Kansas State University Extension Service surveys representative feed yards around the state about their activities in the prior month and then extrapolates the data to arrive at an estimated level of activity for the entire state.  The data then is recorded and compiled into graphs by the Livestock Marketing Information Center.

It was well known that at the time, feedlots were trying to move cattle to slaughter as quickly as packer buyers would take them.  Slaughter weights were down sharply from a year earlier, settling in at a level just above the 2011-2015 average.

Cattle feeders also were aware of an inverted live cattle futures market in which nearby contract delivery months commanded a higher price than deferred delivery months.  The CME Group tries to discourage cash traders from using the futures market as a price-discovery tool, but futures do provide an outlook of expected general price trends.  And futures were telling feeders that the market wanted their cattle now, not later.

 

FEED EFFICIENCY DOWN

 

However, what isn’t as well understood is that the cattle were finishing less efficiently than they did in March, returning to near-normal levels after a very efficient March and February.

Average days on feed for steers showed little difference from last year or the previous five-year average.  On average, steers sold to packers in April spent 166 days bellying up to the feed bunk.  This compares with 168 pounds last year and the 2011-2015 average of 162.8.

Average daily gain for those steers also was near normal and last year at 3.41 pounds.  Last April, steer gains averaged 3.45 pounds a day, and for the previous five-year average, they gained 3.374 pounds.

No surprises there, but a look at the graph of average pounds of feed needed for a pound of gain shows a startling bounce back to normal in April.

Cold weather conditions in March and April likely played a huge role in the lowered feed efficiency, analysts said.  A blizzard in late April was too late to affect these cattle, many of which had already gone to slaughter.

But at least the cost of that feed was down.  The KSU Extension data showed the average cost of the feed necessary to add 100 pounds to the average animal was $72.56, down $9.09, or 1.11%, from $81.65 last year and $30.21, or 29.4%, below the 2011-2015 average of $102.77.

The numbers were similar for heifers on feed except that average days on feed remained well below last year and the previous five-year average.

 

CASH CATTLE QUIET

 

Fed cattle traded on the livestock exchange Wednesday at an average of $132.18 per cwt on a live basis, down $0.36 from $132.54 a week earlier.  Cash trading then took place at $131.25 to $132.50, steady to down $0.75.

However, the bulk of last week’s trading took place on Thursday and Friday at $136 to $137.50 per cwt on a live basis, up $4 to $5, and at $215 to $216 on a dressed basis, up $7.

The USDA’s choice cutout Monday was up $3.11 per cwt at $248.35, while select was up $1.38 at $219.44.  The choice/select spread widened to $28.91 from $27.18 with 96 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $152.31 per cwt, up $2.51.  This compares with Monday’s Aug settlement at $159.87, up $1.15.