Less Cattle on Feed; Strong Feeder Prices to End 2013

By: Derrell S. Peel

With most auctions closed the next two weeks, last week’s combined Oklahoma auction summary was the final report for the year.  Calf prices finished the year with the strong tone that has prevailed all fall. Steers under 500 pounds were priced at $212/cwt and higher, up 31 percent from lows in June and about 19 percent higher than one year ago. Seven-weight feeder steers were in the low $160/cwt. last week, up 23 percent from May lows and 11 percent higher than this time last year.  Feeder cattle prices are expected to average 11-13 percent higher in 2014 compared to 2013.  Feeder cattle supplies will continue to tighten in 2014 if forage conditions favor accelerated heifer retention and herd expansion.

The December Cattle on Feed (COF) report indicated that November placements were 96.9 percent of year earlier levels; smaller than the average pre-report estimate but within the wide range of estimates.  Marketings were 95.5 percent of last year, with one less business day in the month compared to last year.  The December 1 on-feed total was 94.5 percent of last year at 10.725 million head, the smallest December feedlot inventory since 1996. 

The COF report also confirms regional changes in feedlot production.  December feedlot inventories were down more, year over year, in the Southern Plains compared to the Midwest.  Feedlot inventories in Iowa were 100 percent of last year with Nebraska at 96 percent of one year ago, while Texas and Kansas inventories were 93 and 94 percent of last year.  Oklahoma, in particular, has seen a sharp drop in feedlot inventories in 2013.  The December 1 Oklahoma feedlot inventory was 77 percent of year ago levels.  Oklahoma placements, January through November, were down 9.6 percent while marketings were down only 1.4 percent leading to the reduced current inventory and smaller future marketings.  December 1 feedlot inventories in Texas and Oklahoma represented less than 26 percent of the total U.S. feedlot inventory for the first time since the current cattle on feed data series began in 1996. 

Reduced feedlot production in the Southern Plains no doubt reflects the dramatic herd reductions in the region due to drought since 2010 but may also reflect longer term changes in cattle feeding competitiveness compared to the Midwest.  It was noted in 2007 that generally higher grain prices combined with increased availability of by-product feeds in the Corn Belt would shift cattle feeding competitiveness somewhat to the Midwest relative to the Southern Plains.  It is difficult to separate long term trends from short term market impacts but time will tell.

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