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Feeder Cattle Supplies Continue to Tighten

October 3, 2012

By Donald Stotts, Oklahoma State University

Drought conditions have had a significant effect on feeder cattle supplies, with feedlots expected to feel a noticeable pinch in the months ahead as they will be unable to maintain current inventories.

Derrell Peel, Oklahoma State University Cooperative Extension livestock marketing specialist, explains that feedlots have not placed the large numbers of lightweight cattle that will stay on feed for many months, as was the case last year.

"While lightweight placements will increase seasonally the next couple of months, the weight distribution in feedlots suggests that feedlot inventories will pull below year-earlier levels and stay below for many months," he said.

The latest Cattle on Feed report indicated that the Sept. 1 feedlot inventory was 99 percent of the total at the same time last year. This represents only the second time in the last 28 months that feedlot inventories have dropped below year-earlier levels on a month-to-month basis. The only other time was a brief May 1 decrease.

"At 10.637 million head, the Sept. 1 report was still 4.5 percent greater than the same period in 2010," Peel said. "In fact, except for the slight decrease from last year, the Sept. 1 inventory is the largest since 2006. This is remarkable given that the total calf crop has decreased every year since 2006. The last annual increase in the calf crop was in 1995."

The 2012 calf crop is projected at 34.5 million head, a decrease of 6.8 percent from 2006 and a decrease of 2.3 percent from last year.

"Additionally, feeder cattle imports are expected to drop, if not immediately then certainly in the next few months, contributing to the inability of feedlots to maintain animal inventories," Peel said. "Throw in a projected lessening of widespread drought in 2013 and increased heifer retention combined with a still smaller calf crop will further reduce feeder supplies."

Increased imports of feeder cattle from Mexico and Canada partially offset decreased U.S. calf production. The increase in feeder cattle imports from 2010 through the year to date in 2012 equals roughly 40 percent of the decrease in calf crop during the period.

So far in 2012, imports of feeder cattle are up about 287,344 head, a 35 percent increase mostly caused by increased imports from Mexico. At the current pace, Mexico could contribute an additional 220,000 head of cattle by the end of the year. However, agricultural economists expect Mexican cattle imports to slow in the coming months.

"It appears that much of the increase in Mexican cattle numbers since 2010 is the result of drought impacts," Peel said. "In 2011, 34 percent of the year-over-year increase in Mexican cattle imports was heifers, representing 14.7 percent of total cattle imports and the largest imported heifer total going at least back to 2001."

For the January-July 2012 period, the number of imported heifers was in excess of 268,000 head, more than was seen in all of 2011 and representing 27 percent of the year-to-date import total compared to last year.

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RELATED TOPICS: Beef, Cattle, Feedyard, Stocker

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