Cattle Markets’ Muddy Outlook

Cattle traders and producers are having a difficult time coming to terms with a market outlook for the rest of 2015 because of unusual market conditions and incentives, a well-known Extension economist says.

Derrell Peel, agricultural economist at Oklahoma State University said extremes in market conditions and behavior are clouding the picture.

The latest Cattle-on-Feed report showed the makeup of cattle in confinement facilities was unique.  The number of heifers on feed was down 10.1% from a year earlier and was the lowest quarterly heifer on feed number since 1996.  The lower number of heifers on feed shouldn’t be surprising given the level of herd rebuilding taking place among cow/calf producers.

However, the number of steers in feedlots increased 5.4% in April from a year earlier to the highest quarterly number since January 2008.  The result was that the steers on feed amounted to a record 69% of the total, 2.4% more than a year earlier.

It looks like feedlots have drawn heavily on available steer supplies to maintain feedlot inventories.




For months, the bias in feedlot placements has swung between light-weight and very heavy calves, leaving the more traditional middleweights out.  This has added to the challenge of trying to keep up with the markets because of the difficulty of estimating the average weight in each category or when they would be ready for slaughter.

Average placement weights vary depending on changes in animal size from month to month, the open-ended nature of the USDA weight categories and because of changes to the steer and heifer mix.

Among the March feedlot placements, 39.4% were cattle weighing more than 800 pounds, the highest on record, and first-quarter placements of these heavyweight calves is 35.8%.  Placements in this category in the year-ago quarter amounted to 31% of the total.

But the average in that weight group could vary from just over 800 pounds to more than 900, changing the timing of slaughter readiness by a month and the size of the cattle when slaughtered.

A casual view of auction reports shows a significant number of steers exceeding even 1,000 pounds are passing through the rings this spring.

That suggests a somewhat larger seasonal increase in feedlot marketings into the third quarter and a larger-than-normal tightening of fed cattle supplies later in the year.  However, the variability in total placements and in the weight distribution over the last few months makes this anything but a clear picture.




Adding to the cloudiness of the cattle-market outlook is the weight of cattle at slaughter, which keeps climbing above previous years.  The heavier carcasses offset some of the declining cattle slaughter on beef production, reducing some demand for more cattle and putting the market into unfamiliar territory.

And incentives for feedlots to add weight to their cattle are limited feeder cattle supplies and record-high prices, lower feed costs and negative margins.  Plus, K-State data show the average time on feed for heifers exceeds that of steers, keeping heifer slaughter weights closer to steers and further complicating the outlook.




Cash cattle markets Monday were quiet with no bids or offers reported.  Last week cattle traded at mostly $160 per cwt on a live basis and mostly $255 dressed.

The USDA’s beef cutout value was higher with the choice cutout at $255.64 per cwt, up $1.00 and select at $243.90, up $0.68.  Volume was moderate, with 108 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Friday was $215.77 per cwt, down $2.23.