The January USDA Cattle inventory report will be especially interesting given the dynamics of 2020 and the production expectations for 2021, said Josh Maples, assistant professor and Extension economist at Mississippi State University in a letter to Extension agents through the Livestock Marketing Information Center called In The Cattle Markets.
2020 FEEDER RECEIPTS SHOWED LARGE SHIFTS
This year has shown some pretty large shifts from normal for every sector of the cattle industry, Maples said. The number of feeder and stocker cattle auction receipts are no exception.
The USDA Agricultural Marketing Service’s weekly estimates of feeder and stocker cattle sold at auction in 2020 reflected some of the dynamics and challenges faced by producers, he said.
The COVID-related disruptions during the spring are evident when looking at the data, Maples said. The number of auction receipts during March and April was 33%, or 661,000 head, fewer than during the same months of 2019.
Prices were very low during this period, and there were gathering-size and travel restrictions in most places, he said. Many producers responded by holding cattle longer before selling.
The expected rebound came in the May-through-July period when auction receipts were about 18%, or 306,000 head, more than during those months in 2019, Maples said. August was much stronger than August 2019, but this was driven in part by the low prices during August 2019 linked to the Tyson packing plant fire.
That disruption likely led to a similar holding strategy for cattle that came to market in later months.
2020 CHALLENGES
Fall 2020 also has had plenty of challenges, Maples said. Drought and higher grain prices pressured feeder cattle markets during October, and auction receipts dipped again as some producers with available feedstuffs attempted to wait on a stronger market.
We may see some larger late runs since the market has rebounded, he said, especially in the Southeast where producers may have generally had better pasture conditions compared with other regions.
Year-to-date, 2020 auction receipts are down 4.3% compared with 2019, Maples said. This dataset does not tell the whole story — not all cattle are sold in auctions, and some are sold multiple times. However, the year-over-year comparisons are interesting.
Underpinning all of this is the expectation that the calf crop has declined slightly since the peak in 2018, Maples said. The USDA estimated the national calf crop has declined a little less than 1% each of the past two years. And lower placements into feedlots also lend credence to the thought of lower calf crop totals on an annual basis.
CATTLE, BEEF RECAP
Fed cattle trade was reported in the Plains this week at $105 per cwt on a live basis, down $1 to $3 from last week. Dressed-basis trading was seen at $165 to $166, down $3 to $4.
The USDA choice cutout Wednesday was down $1.60 per cwt at $207.22, while select was off $0.11 at $192.09. The choice/select spread narrowed to $15.13 from $16.62 with 109 loads of fabricated product and 34 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.05 to $1.10 a bushel over the Mar CBOT futures contract, which settled at $4.27 1/4 a bushel, up $0.02 1/2.
Thirty-five steer contracts were tendered for delivery against the Dec futures Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $136.64 per cwt, down $0.05. This compares with Wednesday’s Jan contract settlement of $140.85 per cwt, up $0.75.