Farm Bureau Foresees Challenges for U.S. Cattle Sector

US - The Agriculture Department’s monthly cattle-on-feed report released Friday revealed a decline in the U.S. cattle inventory, as well as a significant decrease in the number of cattle placed into feedlots during January. American Farm Bureau livestock economist Jim Sartwelle said severe winter weather conditions across a vast majority of cattle country accompanied by increasing prices for livestock feed contributed to the decline.
calendar icon 26 February 2007
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More specifically, on a monthly basis, Feb. 1, was the first time cattle and calves on feed for slaughter, in U.S. feedlots with capacity of 1,000 or more head, were below year- earlier levels since October of 2005. The 3 percent drop was the largest year-over-year fall since 2003. Sartwelle said the decline was anticipated. January placements were lower than a year ago for the fifth straight month.

“The year-to-year reduction for the Feb. 1 inventory number is significant,” said Sartwelle. “This is only the fourth month to see a year-to-year inventory decline since October 2003.”

In addition, placements in feedlots during January totaled 1.69 million, 23 percent below 2006 and 10 percent below 2005. Net placements were 1.59 million head, which is the second-lowest placement for the month of January since USDA began keeping cattle-on-feed records in 1996. During January, placements of cattle and calves weighing: less than 600 pounds were 320,000; 600 to 699 pounds were 390,000; 700 to 799 pounds were 545,000; and 800 pounds and greater were 435,000. Sartwelle said the decline, which was greater than analysts anticipated in pre-report estimates, can be attributed in part to severe storms in major cattle feeding states. In fact, “other disappearance,” which is cattle not accounted for that likely died in blizzard conditions, totaled 97,000 during January, 17 percent above 2006 and 33 percent above 2005.

“A 23-percent drop in placements during January was partially driven by weather, but the larger reason is the lack of ready feeder cattle supplies,” said Sartwelle. “I expect this lack of feeder cattle to support fed cattle prices in the $90s for most of 2007. In turn, the pressure to keep feedyards occupied will mitigate some of the devastating effects of higher-priced rations on the feeder cattle and calf markets across the nation.”

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