Data and anecdotal indications, say the COVID backlog of fed cattle is rapidly diminishing and may be nearly cleaned up, said Oklahoma State University Agricultural Economist Derrell Peel, in a newsletter to Extension Agents called Cow/Calf Corner.
Going forward, the one-million-head decrease in feedlot placements in February, March and April suggests front-end feedlot supplies will be relatively tight at least through September, Peel said.
PLACEMENTS ROCKED
Feedlot placements were down 17.7% from last year in February, March and April and, despite the 11% increase in July, are down 7.1% year over year for the last six months, Peel said.
Feedlot marketings dropped 25.6% in April and May from last year and are down 6.0% in the six months from February to July, he said.
The August USDA Cattle on Feed report pegged the Aug. 1 feedlot inventory at 11.284 million head, 101.5% of last year. Peel said this was the largest Aug. 1 feedlot inventory in the data series back to 1996.
July placements were 111% of last year and were the largest July placements since 2011, he said. Marketings, at 99.4% of a year ago, were about as expected.
BACKLOG STILL CONCERNS
One of the biggest concerns in fed cattle markets is the extent to which the backlog of fed cattle created in April and May still remains, Peel said. Although June and July marketings were about equal to a year ago, a significant portion of these marketings likely were fed cattle carried over from April and May.
Placement reductions as far back as February reduced the number of finished cattle starting as early as June, he said. Not only were total placements down in the February to July period, but more of the reduction was in heavyweight placements, further reducing the number of cattle finishing now.
In the last six months, feedlot placements under 700 pounds have made up a larger percentage of total placements, which further reduces the number of cattle finishing at this time, Peel said.
CARCASS WEIGHTS UP
Carcass weights provide another indication of how current feedlots are, Peel said. Steer and heifer carcass weights have been above year-ago levels all year but the gap got especially wide in May as delayed marketings pushed carcass higher rather than to the normal seasonal low.
In May, steer carcasses averaged more than 49 pounds heavier year over year and heifer carcasses averaged nearly 42 pounds heavier, he said. Currently, carcass weights still are above a year ago and are increasing seasonally but the gap with last year is narrowing.
The latest data shows steer carcass weights are 28 pounds higher year over year while heifer carcass weights are 26 pounds above one year ago, Peel said. Carcass weights may continue above year ago levels for the remainder of the year but the gap likely will narrow a bit more.
CATTLE, BEEF RECAP
Fed cattle trading was reported in the Plains this week at $105 to $106 per cwt on a live basis, steady to down $1 from last week, and at $167 dressed, down $1 to $5.
The USDA choice cutout Wednesday was up $1.77 per cwt at $231.45, while select was up $1.85 at $214.11. The choice/select spread narrowed to $17.34 from $17.42 with 72 loads of fabricated product sold into the spot market.
No steer or heifer contracts were tendered for delivery Wednesday against the Aug live cattle futures contract.
The CME Feeder Cattle Index for the seven days ended Tuesday was at $143.60 per cwt, down $0.02. This compares with Wednesday’s Aug contract settlement of $142.47 per cwt, up $0.22.