The current level of heifers on feed does not suggest heifer retention for herd expansion, said Derrel Peel, Oklahoma State University Extension livestock marketing specialist, in a letter to Extension agents called Cow-Calf Corner.
From 2014-2016 in the last herd expansion, the average level of heifers on feed was 33.6%, Peel said. The total on-feed inventory in Friday’s Cattle on Feed report included 62.3% steers and 37.7% heifers.
The report showed a record April feedlot inventory of 12.1 million head, up 1.7% from last year. The quarterly inventory of steers on feed was up 1.8%, while the inventory of heifers on feed was up 1.7%.
PLACEMENTS FRACTIONALLY LOWER
March placements were down only 0.4% from last year, well above pre-report expectations of an 8% decrease, he said. Once again, feedlots found cattle to place when supplies were tightening.
The largest increase in placements was in Nebraska, which was up 6.8% from last year, Peel said. Placements in Kansas and Colorado were equal to last year while Texas was down 6.5%. Iowa was down 10.7%.
March feedlot marketings were down 2.0% from last year as expected, he said. Nebraska also had large marketings in March, up 7.7%. Kansas marketings were up 2.1%.
Iowa marketings were down 0.9% year over year in March, while Texas was down 8.8%, and Colorado feedlots marketed 9.3% fewer cattle compared with last year.
SPECTRE OF MORE DROUGHT RISES
As May approaches and widespread drought conditions persist, Peel said he expected cattle industry effects to accelerate. There already are indications that drought is affecting cattle markets significantly.
Auction totals and other data seemed to indicate that March placements would be sharply lower, Peel said. The unexpectedly large March placement total may indicate unusual movement of feeder cattle.
It is possible that some heifers originally designated as replacements on Jan. 1 are being diverted to feedlots, he said.
Beef cow slaughter for the year is up 17.5%, Peel said. This, combined with the large number of heifers in feedlots and the fact that heifer slaughter is up 2.0% thus far in 2022, suggests female numbers were being pulled down even before the worst drought impacts were felt.
Perhaps the ongoing drought, combined with strong feeder cattle and cull cow prices prompted early herd adjustments, Peel said. At the current pace of cow slaughter, the beef cow herd could decrease up to 4% this year, the largest yearly decrease in beef cow inventory since the 1980s.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $139.77 to $147.00 per cwt, compared with last week’s range of $141.47 to $143.77. FOB dressed steers, and heifers went for $219.04 to $223.13 per cwt, versus $217.03 to $221.89.
The USDA choice cutout Wednesday was down $2.26 per cwt at $261.91, while select was off $3.91 at $252.32. The choice/select spread widened to $9.59 from $7.94 with 125 loads of fabricated product and 35 loads of trimmings and grinds sold into the spot market.
The USDA reported that basis bids for corn from feeders in the Southern Plains were unchanged at $1.50 to $1.60 a bushel over the May futures and for southwest Kansas were unchanged at $0.10 over May, which settled at $8.15 1/2 a bushel, up $0.12 1/4.
Twenty-five heifer contracts were tendered for delivery and demanded Wednesday at zero.
The CME Feeder Cattle Index for the seven days ended Tuesday was $156.21 per cwt up $0.09. This compares with Wednesday’s Apr contract settlement $156.20, unchanged, and May’s $157.35, down $3.37.