October cattle on feed mostly neutralThe report was delayed by the government shutdown.
By: SDSU Extension Service,
BROOKINGS, S.D. — Because of the government shutdown, the U.S. Department of Agriculture delayed the release of its October cattle on feed report from Oct. 18 to Oct. 31. Perhaps related to the delayed release, the actual numbers in the report were close to the trade’s pre-release expectations, confirming a tight cattle on feed inventory, says Darrell Mark, adjunct professor of economics at South Dakota State University.
In his Nov. 1 summary, Mark says cattle marketings during September 2013 totaled 1.695 million head, according to USDA.
“That’s about 6 percent above September 2012; however, when adjusting for one extra slaughter day in September 2013, average daily marketings were up 0.8 percent. Moreover, the relatively constant marketings compared to last year is consistent with federally inspected steer and heifer slaughter for September 2013 being only marginally higher than a year ago,” Mark says.
As has been the case for several months, Mark says the placements data were of particular interest in the October cattle on feed report.
“On average, the trade expected nearly a 1 percent increase in September 2013 placements. USDA indicated that 2.025 million cattle were placed on feed in September, which was 1 percent more than September 2012,” he says.
As has generally been the case for the past several months during high feed prices, cattle feeders tended to concentrate their placements toward heavier feeder cattle and fewer lightweight calves.
Looking ahead, Mark says cattle feeders are likely to place more lightweight calves on feed in the coming months as spring calves are weaned this fall and corn prices continue to decline. He adds that feedlot placements by state were fairly volatile during September, with some states posting a large increase in placements while others posted sharp declines in placements.
Iowa and Nebraska, with prospects for a plentiful new crop corn supply, placed 13 and 11 percent more feeder cattle in September 2013 than a year ago. Kansas and Oklahoma also saw 4 and 18 percent increases in placements, respectively. But Colorado and Washington placed 16 and 20 percent fewer cattle compared with a year ago.
South Dakota placed 14 percent fewer cattle on feed during September.
“Although the severe blizzard that impacted western South Dakota and parts of Montana and Wyoming likely impacted calf sales and placement into feedyards, that storm occurred in early October and would not affect the September 2013 placements data for these states,” Mark says. “However, it is possible that South Dakota, with its relatively large number of small cattle feedyards (i.e., less than 1,000 head capacities), is beginning to place and feed more cattle in these smaller yards.”
Mark says these smaller feedyards are not included in USDA’s monthly cattle on feed report survey. So, this possibility will not be confirmed until the release of USDA’s cattle inventory report in January.
The Oct. 1, cattle on feed inventory totaled 10.144 million head, which is 7.7 percent less than a year ago and, Mark says, close to pre-release expectations.
“This is the smallest Oct.1 on feed inventory since 1998,” he says. “The small number of cattle on feed is largely responsible for the push to record high fed cattle prices at the end of October.”
Overall, Mark says reaction to the October cattle on feed report will be relatively neutral as actual reported numbers were close to pre-release expectations.
“Looking ahead, placements of calves will likely increase in upcoming months due to lower corn prices and the seasonal increase in the fall run of calves,” Mark says. “However, cattle on feed inventories will likely remain below year-ago levels for the next several months as the historically small cattle herd continues to be realized at the feedyard level.”