The semi-annual Cattle (inventory) report is set for release on Jan. 31, and many in the cattle and beef industries expect to see numbers reflecting a large herd-reduction effort last year.
The reductions were the result of a combination of strong lean beef demand, higher cull cow prices and forage issues stemming from the drought, said Elliott Dennis Extension livestock economist, for the University of Nebraska, Lincoln, in a letter for the Livestock Marketing Information Center called In The Cattle Markets.
FEWER FEEDER CATTLE COMING
Fewer cows last year means fewer feeder cattle, tightening fed-cattle supplies and lower beef production in 2023, Dennis said. Analysts’ estimates for the Cattle report indicate ideas of a 2022 beef cow reduction rate of 3-4%.
Producers make tradeoffs when selling or retaining heifers, he said, and 2023 feeder cattle production will be a result of heifer retention and cull cow sale decisions last year, Dennis said. The Cattle report is intended to indicate how many heifers were held back, affecting feeder cattle numbers in 2024.
ADDITIONAL USDA INFORMATION
Each quarter, in addition to its monthly Cattle on Feed report, USDA-NASS releases the total number of cattle, steers and heifers on feed for the US and 13 primary states, Dennis said. During periods of contraction, heifer placements into feedlots, as a percentage of total cattle on feed, is high and during periods of herd rebuilding, it is low.
Currently, that percentage is 39.74% – the highest percentage since 2002, he said. This is the first indicator that heifer replacements will decrease in 2023.
Combining the historical quarterly percentage of heifers on feed, the Cattle report can provide an indicator of how many heifers will be held back for replacement in the 2023 report, Dennis said. If the percentage of heifers on feed during 2022 is high, a decrease in the number of heifers retained for breeding in 2023 can be expected.
After accounting for historical seasonal changes, the trend of increasing heifers as a percentage of cattle on feed should be slowing, Dennis said. This trend began to shift in the latter part of 2022, providing some evidence that while heifers held back for replacement may be lower in the coming Cattle report, serious herd rebuilding could begin in 2023.
The CME futures seems to support the idea that fewer feeder cattle will be available this year with Fall contracts trading in the $200-$210 range, Dennis said. For places like Nebraska, which generally has a +6.00 basis in the Fall for 700- to 900-pound steers, expected cash prices are projected to be about $210-$220.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $156.19 to $158.08 per cwt, compared with last week’s range of $156.92 to $158.85. FOB dressed steers, and heifers went for $246.62 to $250.96 per cwt, versus $246.75 to $251.19.
The USDA choice cutout Tuesday was down $0.77 per cwt at $276.66 while select was off $2.02 at $254.53. The choice/select spread widened to $22.13 from $20.88 with 87 loads of fabricated product and 45 loads of trimmings and grinds sold into the spot market.
The USDA said basis bids for corn from feeders in the Southern Plains were down $0.10 at $1.85 to $2.00 a bushel over the Mar corn contract. Bids in Kansas were steady at $0.85 over the Mar, which settled at $6.85 1/4 a bushel, up $0.10 1/4.
The CME Feeder Cattle Index for the seven days ended Monday was $181.05 per cwt down $0.63. This compares with Tuesday’s Jan contract settlement of $179.65 per cwt, down $1.60.