Projecting Cattle On Feed Tricky: Economist

Projecting the number of cattle on feed before the USDA’s monthly report is a tricky thing to do, said Matthew Diersen, SDSU risk and business management specialist in a weekly LMIC newsletter to Extension Agents called In The Cattle Markets.

Projecting marketings starts by monitoring estimated and actual slaughter volumes coming in throughout a given month.  These are augmented by trade volumes.  Marketings for previous months also is important.




Building on those ideas, one can look at the current cattle on feed situation, he said.  Among feedlots with 1,000+ head capacity, the total on feed from the January Cattle on Feed report was 12.0 million head, up slightly from a year earlier.

Feeder cattle auction totals have receipts in January below year-ago levels, Diersen said.  Direct deliveries of slaughter cattle may serve as a proxy for marketings, being down slightly in January compared with a year earlier.  These could be combined to infer changes in the on-feed totals for an upcoming Cattle on Feed report.

In the January Cattle (Inventory) report, a snapshot of the US total cattle on feed inventory as of Jan. 1 was 14.7 million head across all feedlots, up slightly from a year ago, Diersen said.

Small feedlots in Iowa had the largest inventory at 570,000 head, he said.  They were followed by those in Minnesota with 280,000 head, Nebraska with 220,000 head, South Dakota with 215,000 head and Kansas with 120,000 head.

The common thread among those states was their location in the western corn belt, Diersen said.  Backing out the differences by size group leaves the small feedlots with an inventory that was down by 45,000 head.  There was no clear pattern in the changes in inventory among states with small feedlots.




Small feedlots could be another source of uncertainty when trying to understand or project the on-feed situation, he said.  With slightly lower inventory levels, they represent additional capacity that could be used to place or market cattle and surprise the trade.

The number marketed by small feedlots is reported annually in the February Cattle on Feed reports, Diersen said.  Over the past five years, the ratio of marketings to beginning inventory, has ranged from 1.2 to 1.3 for small feedlots.

Small feedlots often are farmer-feeders that may only retain their own calf crop, may grow and finish cattle or not consistently re-fill pens because of limited feed supplies or profitability. By comparison, in 2021 large feedlots had 1.9 turns.




The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $140.55 to $143.00 per cwt, compared with last week’s range of $139.02 to $141.83.  FOB dressed steers and heifers went for $218.70 to $221.31 per cwt, versus $216.43 to $220.53.

The USDA choice cutout Wednesday was down $0.75 per cwt at $269.62, while select was off $1.74 at $266.08.  The choice/select spread widened to $3.54 from $2.55 with 90 loads of fabricated product and 21 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 $1.20 to $1.30 a bushel over the Mar futures and for southwest Kansas were unchanged at $0.20 over Mar, which settled at $6.47 a bushel, up $0.09.

Eight heifer contracts were retendered for delivery against Feb at one on Wednesday.

The CME Feeder Cattle Index for the seven days ended Tuesday was $162.59 per cwt down $0.12.  This compares with Wednesday’s Mar contract settlement of $167.45 per cwt, down $1.27.