Lightweight cattle on feed an economic force
Cattle industry analysts got a bit of a surprise recently when the September Cattle-On-Feed report showed the United States inventory of cattle on feed at 105 percent of last year, significantly less than the expected level of 108 percent.
Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist, said widespread expectations that the drought was continuing to force cattle into the feedlot early were borne out dramatically by the sharp increase in placements in Texas, up 15 percent over year ago levels for the month.
"Placement weights also played a factor, as all of the increase was in the 'under-600 pounds' category," he said. "In total, placements of cattle weighing less than 600 pounds increased 44 percent over year-ago levels, led by Texas, which was up 70 percent."
In Nebraska, total placements decreased when compared to year-ago levels, coming in at 93 percent of last year. However, Nebraska placements of cattle weighing less than 600 pounds increased 63 percent over year-ago levels for the month of September.
"This likely reflects movement of lightweight feeder cattle out of the nation's drought areas," Peel said. "There are indications that numerous cows have been placed in feedlots as well, but it is unclear whether or not the cows are accounted for in the latest cattle-on-feed totals."
The weight distribution would not suggest all that many cows are included but the Cattle-On-Feed report questionnaire does not clarify cows versus steers and heifers on feed. As dramatic as the drought-effect numbers were they seemed to be much as anticipated prior to the release of the September report.
"What was not widely anticipated--given that everyone has drought on the brain--was the fact that feeder supplies are extraordinarily tight and how that might lead to significantly lower placements in some other parts of the county," Peel said.
Placements decreased 15 percent in Kansas, 10 percent in Iowa and 7 percent in Nebraska when compared to year-ago levels.
Examine placements weights on a national scale and the story becomes even more dramatic. Though the lightest weight placements increased 44 percent, placements of cattle weighing more than 600 pounds decreased 13.5 percent.
"Poor feeding prospects also likely contributed to fewer placements, especially given the lack of heavy feeders available," Peel said. "Without the drought, total placements in July would have been substantially lower and would have been well below last year in August. This year's Sept. 1 Cattle-On-Feed report probably would have been about even with last year, without the drought."
Most industry analysts expect placements of lightweight feeder cattle to decrease as most of those animals have now moved out of drought areas or have reached higher weights.
Additionally, imports and placements of lightweight Mexican cattle have decreased sharply after the state of Chihuahua dropped to a lower tuberculosis status in August, which should restrict feeder imports into the United States for the remainder of 2011.
Calves and summer stockers have performed well in areas north of Interstate 70, where forage quality and quantity have been good.
"Those cattle have begun moving into feedlots since the release of the Sept. 1 report and will continue to do so in October, thereby producing a more historically normal placement weight distribution," Peel said.
Lightweight calves from the southeastern United States that usually move into winter grazing in the southern Great Plains states likely will move into other areas of the nation for backgrounding purposes, though some will doubtless move directly into feedlots.
"Though nobody can know for certain what would have happened, it seems likely that some half-a-million cattle or more that were placed in feedlots during July and August would not have been placed if not for the drought," Peel said. "Drought effects may continue but feeder movements from this point on should be consistent with normal seasonal patterns."
Cumulative feedlot placement for the year to date increased 3.5 percent despite the fact that estimated feeder supplies decreased 3.3 percent in January and 2.5 percent in July.
Peel expects feedlots to have an increasingly difficult time maintaining inventories through the end of the year and into next year.