Farm Talk


October 2, 2013

Beef Industry lacking in cattle

Parsons, Kansas — The September USDA Cattle on Feed report shows a Sept. 1 feedlot inventory at 9.88 million head, down seven percent from last year and the smallest September feedlot inventory since 2003. The August placement total of 1.79 million head was 11 percent lower than one year ago and was the lowest August placement figure since the current report format began in the mid 1990s. Placements were lower for all weights but down the most for animals weighing under 700 pounds. This follows July placements which were also down nearly 11 percent from the previous year. Feedlot marketings in August were down 3.7 percent from last year. However, marketings as a percent of the on-feed total have been well above year ago levels in July and August.

It is perhaps less surprising that feedlot inventories are rapidly tightening than the fact that it has taken so long for the situation to develop. Drought and several other factors have postponed this situation to some degree since at least 2011. Though the timing is different, changes in several cattle sector flows have supported feedlot inventories and beef production temporarily in the face of ever tighter cattle supplies. The largest component of this, no doubt, is the fact that drought has postponed heifer retention. Most recently, it appears that heifer slaughter has been augmented with heifers diverted into feedlots earlier this year due to extended winter conditions and lack of hay.These heifers, diverted from breeding, were part of the last gasp of higher placements in March and April of this year and are being reflected in higher weekly heifer slaughter at the current time. For the year to date, heifer slaughter is down nearly seven percent from the average heifer slaughter during 2009-2011. With accelerated heifer retention, heifer slaughter may drop another 7-8 percent in 2014.

Other factors have contributed in a smaller way to supporting feedlot inventories up to this point. Large imports of Mexican feeder cattle in 2011 and 2012 offset some of the decreased domestic feeder supplies during that period. Mexican imports dropped sharply about one year ago and is down 44 percent for the year to date. At the current pace, some 600 to 700 thousand head less Mexican feeders will be available in 2013. Feeder imports will continue at a reduced level in 2014. Another minor factor that has supported short term feedlot production is that calf (veal) slaughter has dropped to minimal levels in the past two or three years. While year to date calf slaughter is close to year ago levels, it down nearly 16 percent compared to average calf slaughter during the same period in 2008-2010.

These feedlot production factors, combined with carcass weight impacts and cow slaughter, will determine the total impact on beef production for the remainder of 2013 and beyond. Modestly lower steer and heifer slaughter in 2012 was partially offset by the sharp year over year increases in carcass weights. Carcass weights will increase only slightly in 2013 and 2014 and thus reduced slaughter will be more fully reflected as reduced beef production. Additionally, cow slaughter will likely drop more sharply in 2014 and will combine with lower steer and heifer slaughter to contribute to a projected seven percent decrease in total cattle slaughter and a six-plus percent year over year decrease in beef production. £


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