WASHINGTON – The number of beef cattle and calves entering the nation’s feedyards increased in October, but overall supplies of fed cattle are likely to remain tight into next year, according to American Farm Bureau Federation analysis of the USDA’s latest cattle inventory.
The department’s Nov. 1 Cattle on Feed report provided a behind-the-scenes look at the supply situation that has driven the recent fed-cattle price of $91 to $93 per hundredweight.
The report shows 11.76 million head of cattle and calves were on feed on Nov. 1, down 2 percent from a year earlier.
October placements totaled 2.716 million head, up 12 percent from a year earlier.
Extra day. While October 2007 marketings were 6 percent ahead of the same time last year, it largely was the result of an additional processing day when compared to October 2006.
“Predictions about the latest U.S. cattle inventory and October marketing numbers were generally right on the money,” said Jim Sartwelle, Farm Bureau livestock economist.
“While there are no big surprises in USDA’s report, it’s reasonable to conclude that supplies of fed cattle will be tight at least through the first quarter of 2008, especially when you look at current activity in the futures markets.”
The economist added that trends are tacking back toward the placement patterns that existed before the ethanol boom. Cattle feeders this October returned to the longer-term trend of Octobers past.
Placements. Placements of cattle in the country’s largest feedyards, those with the capacity to feed more than 1,000 head of cattle and calves, were 2.5 percent below those of October 2005; roughly equivalent with those of October 2004; and 2 percent below those of October 2003.
Corn prices increased by 75 cents per bushel during October 2006, and “nervous cattle feeders didn’t know what the future held,” Sartwelle said.
“More and more, we’re hopeful the industry is adjusting to higher feed costs and that the fall of 2006 was an anomaly in cattle feeding.”
Sartwelle expects to see signs of lighter-weight feeder cattle heading to feedyards, due to short supplies of wheat pasture available for grazing this winter. But we haven’t seen that flow of light-weight feeder cattle to the yards yet.
Shift. He said that is a shift away from October 2006, when more than one-third of newly placed feeders weighed less than 600 pounds.
“Supplies of heavier-weight feeder steers and heifers are still pretty tight, as evidenced by nearly 60 percent of all placements weighing in at less than 700 pounds, despite the crystal-clear preference by the market for heavier calves,” Sartwelle said.
In addition, cattle inventories remain down in nearly all the major cattle-feeding states: Idaho (down 18 percent from Nov., 1, 2006), Colorado (down 9 percent), Oklahoma (down 7 percent), Kansas (down 5 percent) and Nebraska (down 3 percent).
The Texas inventory was even with October 2006, while on-feed inventories were up 12 percent in Iowa from a year earlier, up 8 percent in South Dakota, up 5 percent in Arizona and up 3 percent in California.
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