November 27, 2013
US November cattle on feed down 5.7% on-year
The number of US cattle on feed in feed yards with more than 1,000 head capacities was 5.7% lower than a year ago, as indicated in the USDA''s November Cattle on Feed report.
At 10.607 million head on feed as of November 1, 2013, that is the smallest November 1 on feed inventory since 1996, when the current data series began The report also showed that the actual on feed estimate was close to average industry expectations.
The smaller on feed inventory was achieved despite a fairly large percentage increase in October placements. In October 2013, cattle feeders placed 2.394 million head of feeder cattle on feed. That''s almost 10% more than in October 2012, but close to the five-year average for October placements. The 10% increase comparison to last year partially resulted from calves being placed on feed during the summer and earlier in the fall in 2012 due to widespread drought, which effectively reduced placements in October 2012.
This year, with improved pasture and range conditions in much of cow-calf country (except the western mountain states) and cheaper corn at harvest time, calf placements have followed a more traditional pattern of ramping up through October. In fact, monthly placements have increased 52% from June 2013 through October 2013 compared to an average increase in placements of 54% from June through October.
The southern states led the increase in October placements relative to a year ago. Texas placed 18% more feeder cattle in October 2013 compared to October 2012. Kansas, Colorado, and Arizona also increased placements by 24%, 18%, and 47%, respectively. Oklahoma placements were steady during October. Of course, these southern states were some of the ones hardest hit by successive years of drought that caused calves to be placed earlier than normal last year.
Of the northern feeding states, only Nebraska placed more cattleon feed in October this year (+7%). Iowa and South Dakota placements were down 12% and 17% compared to a year ago. Likely, part of the drop in South Dakota placements is attributable to the severe early October blizzard in western South Dakota that delayed calf marketings. Additionally, both these states have a large number of farmer-feeders who may have additional interest in placing calves this fall (due to cheaper corn), but are not included in the monthly Cattle on Feed survey because their feed yard capacities are under the 1,000 head threshold.
As is typical in October, cattle feeders significantly ramped up placements of calves last month. Of the 2.394 million head placed in October, 720,000 head (30%) weighed less than 600 pounds. Another 24% (584,000 head) weighed between 600 and 699 pounds. Compared to a year ago, placements weighing less than 600 pounds and 600-699 pounds were up 5.9% and 15.6%, respectively. Placements weighing 700-799 pounds totalled 510,000 head, which was 17.2% more than in October 2012. This weight category saw the largest percentage increase in October placements compared to a year ago is consistent with these cattle having better projected feeding profits, which were discussed in last week''s Cattle & Corn Comments. Feeder cattle placements weighing over 800 pounds totalled 580,000 head in October. That was only 3.6% higher than a year ago, which reflects seasonally smaller supplies of heavy yearlings at this point of the year.
Fed cattle marketings during October were 1% higher than a year ago at 1.856 million head. The 1% increase in October marketings closely tracks the over-year comparison of federally inspected steer and heifer slaughter. Marketings as a percentage of the cattle on feed inventory increased to 18.3% during October, indicating a relatively good marketings pace that was likely spurred by record high fed cattle prices by the end of the month.
Overall, the November Cattle on Feed report will be considered mostly neutral to the trade as actual numbers were close to expectations. In the coming months, cattle feeders are likely to be aggressive in placing cattle on feed as cheaper corn leads to improved feedlot profit projections. However, overall tight calf supplies and heifer retention interests will result in lower cattle on feed inventories that should lead to new record high fed cattle prices in 2014.