Heifer retention is expected to increase sharply at some point in the coming months, which will drop the number of heifers in feedlots and decrease heifer slaughter, said Oklahoma
State University Extension Livestock Marketing Specialist Derrell Peel, in a newsletter called Cow-Calf Corner.
The July quarterly USDA data showed heifers made up 39.9% of feedlot inventories, Peel said. When heifer retention begins in earnest, this percentage will drop to about 32%.
That suggests average feedlot inventories likely will drop another 1.0 to 1.2 million head at least in the next eight to 18 months, he said. Feedlot inventories likely will decline to a level close to the 2014 low and stay relatively low for many months.
ON-FEED REPORT SHOWS DECLINE
The latest USDA Cattle on Feed report pegged the Sep. 1 feedlot inventory at 11.094 million head, down 2.2% year over year, Peel said. The September feedlot total was up slightly from the August summer low, which was the lowest monthly on-feed total since September of 2019.
Feedlot inventories have been lower year over year for the past twelve months, he added.
The 12-month feedlot inventory moving average peaked in September 2022 at 11.836 million head, Peel said. The September 2023 12-month moving average was 11.507 million, down 2.8% from the peak.
The 2014 cyclical low of 10.375 million head likely is a target for feedlot inventories in the coming months, he said.
Following the drought a decade ago, the 12-month moving average feedlot inventory dropped to less than 11 million head in April 2013 and remained below that level for 58 months through January 2018, he said. This was the period of rapid herd expansion in the last cattle cycle.
A similar situation is likely going forward, beginning in 2024, Peel said.
PLACEMENTS DOWN
August’s monthly feedlot placements were down 5.1% year over year, the lowest August placements since 2019, he said. Placements have decreased year over year for 10 of the last 12 months, with total placements down 897,000 head in the last year.
A 12-month moving average of placements shows that the peak annual average monthly placements occurred in December 2019, consistent with the cyclical peak in the calf crop in 2018, Peel said.
However, pandemic delays from 2020 into 2021 and drought enhanced placements in 2021 and 2022 have kept feedlot placements high until the last few months, he said. The current 12-month moving average of placements for August just dropped to the lowest level since May of 2017.
Average placements are expected to continue declining for the foreseeable future, Peel said.
August’s feedlot marketings were down 6.0% year over year, he said. Total marketings for the year to date are down 3.4%.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $182.69 per cwt to $187.04, compared with last week’s range of $182.50 to $187.80 per cwt. FOB dressed steers, and heifers went for $286.98 per cwt to $291.23, compared with $287.19 to $292.38.
The USDA choice cutout Wednesday was down $3.31 per cwt at $296.76 while select was off $0.72 at $274.87. The choice/select spread narrowed to $21.89 from $24.48 with 143 loads of fabricated product and 33 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.37 to $1.50 a bushel over the Dec corn contract, which settled at $4.86 a bushel, down $0.01 1/2.
The CME Feeder Cattle Index for the seven days ended Tuesday was $251.90 per cwt, up $0.11. This compares with Wednesday’s Oct contract settlement of $247.77, down $0.82.