Feedlots are doing everything they can to maintain feedlot inventories, but they can only do so much in the face of declining herd numbers, said Derrell Peel, Oklahoma State University Extension livestock marketing specialist, in a letter called Cow-Calf Corner.
As feeder steer and heifer numbers dwindle with smaller and smaller calf crops, feedlot managers have kept the animals they have on feed a little longer to pack on a few extra pounds, Peel said.
OPTIONS DECLINE
Another analyst said feedlot options decline with a declining cow herd. Eventually, it comes down to two choices: keep cattle on feed a little longer to realize more income with more pounds per animal sold, or pony up for whatever feeder calves are available.
USDA data show that weekly fed steer dressed weights have been higher than 2023 in every week with a sharp upward diversion, beginning the second week of February. Additionally, steer dressed weights were higher than the 2018-2022 average all last year.
MISLEADING INFO
The April Cattle on Feed report pegged feedlot inventories at 11.82 million head, up 1.49% from one year ago, Peel said.
That report also included the quarterly breakdown of feedlot inventories by gender. Peel noted that the number of steers on feed April 1 was 7.266 million, up 1.7% year over year and heifers on feed were 4.555 million head, up 1.1%.
Heifers made up 38.5% of total feedlot inventories, down from 39.7% in January, Peel said. While the heifer percentage remained above the 10-year average, the decline from January to April is a sign that heifer feeding is perhaps slowing.
During rapid herd expansion in 2015-2017, the heifer percentage of feedlot inventories dropped below 34% and averaged below 33% for 10 consecutive quarters, or 2 ½ years, Peel said. Many expect heifer feeding to decrease significantly in coming months.
PLACEMENTS DOWN
March feedlot placements were down 12.3% year over year, a larger decrease than expected, Peel said. Feedlot placements have been declining for many months.
A 12-month moving average of placements in March was at the lowest level since April 2017, Peel said. Total placements in the last six months, which would account for the bulk of cattle currently in feedlots, are down 2.3% from the same 2023 period.
How, then, can feedlot inventories be above year earlier levels as they have been for the last seven months?, Peel asked. The answer is that feedlot marketing rates have fallen even faster than placements.
Feedlot inventories are expected to decline in the next few months despite feedlot actions to delay the inevitable, Peel said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $183.02 per cwt to $183.06, compared with last week’s range of $181.32 to $187.00 per cwt. FOB dressed steers, and heifers went for $289.42 per cwt to $290.67, compared with $285.91 to $290.32.
The USDA choice cutout Monday was up $0.39 per cwt at $297.53 while select was up $1.49 at $290.21. The choice/select spread narrowed to $7.32 from $8.42 with 80 loads of fabricated product and 24 loads of trimmings and grinds sold into the spot market.
The weighted average USDA listed wholesale price for fresh 90% lean beef was $347.75 per cwt, and 50% beef was $77.04.
The USDA said basis bids for corn from feeders in the Southern Plains were down $0.07 to $0.09 at $1.36 to $1.44 a bushel over the May corn contract, which settled at $4.39 1/4 a bushel, down $0.00 3/4.
No live cattle contracts were tendered for delivery Monday.
The CME Feeder Cattle Index for the seven days ended Friday was $247.18 per cwt, up $1.65. This compares with Monday’s May contract settlement of $248.02, down $0.67.