Cattle Supply To Drop After Christmas

US – Cattle supply is expected to decline in the New Year, market analysts have predicted, following the latest Cattle on Feed report, released 31 October.
calendar icon 4 November 2013
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Lower cull cow marketings and feedlot numbers will dry up supply in the first quarter of 2014, with short term supply trending lower for the rest of 2013.

The report showed an increase in placements, both on the preceding August and a 0.9 per cent lift year-on-year, something of a surprise against declining Mexican imports and heifer retention.

September placements were up 21,000 at 2.025 million, of which, many cattle trended heavier. Texas was steady and, after sharp drops in the previous month, Kansas lifted four per cent.

US Department of Agriculture data indicated 7.1 per cent more cattle over 700 pounds were placed compared to last year, with light cattle down 6.9 per cent.

“Cattle placements continued to skew on the heavy side, reflecting the improvement in pasture conditions compared to last year,” said Len Steiner, a leading agricultural economist in Chicago.

Many states showed a recovery in placements shorter term as the US finished September 113 per cent up overall.

Colorado, Iowa, Oklahoma and South Dakota all boasted September placements at least 31 per cent greater than the preceding August. Iowa led the figures with a 151 per cent increase.

Expansion plans have been highlighted as a market influence, after a period of elevated slaughter showed reductions.

“There are indications that heifer retention is accelerating this fall,” said Professor Lee Schulz, University of Iowa Extension Livestock Economist.

“Heifers on feed dropped sharply in the last half of 2012 then increased relatively in the first half of 2013, part of the residual effects of drought, reduced hay supplies and extended winter impacts,” said Professor Schulz.

“Taking the view of a technical analyst that all relevant and available data are embodied by a given market price, one could look at the spot market price for replacement and feeder cattle to see if the market is indeed reflecting growing demand for replacement heifers.

“A check of Iowa auction reports for October indicates multiple auction markets where replacement heifers are noted in the market report. Heifers denoted as replacements are bringing significantly higher prices than uncommented feeder heifers of the same weight and class.”

He explained that summer data shows heifer slaughter has been up 2.7 per cent since July after a 3.7 per cent slump across the first half of 2013.

But he added: “This bulge in heifer slaughter should be nearly finished and decreasing heifer slaughter is expected for the remainder of the year.”

“Heifers and Heifer calves on feed remain lower than any quarter since the 4th quarter of 2004. Coincidentally, the last phase of herd expansion, albeit aborted that time.”

Michael Priestley

Michael Priestley
News Team - Editor

Mainly production and market stories on ruminants sector. Works closely with sustainability consultants at FAI Farms

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