Cattle Market Pressured by Heavier Weights, Fewer Heifer Placements

January 27, 2016 11:53 AM

The recent cattle on feed report released by the U.S. Department of Agriculture depicts fewer heifers placed on feed, signaling continued expansion among producers across the country.
By: Blair Fannin, Texas A&M AgriLife 

More feedlot placements than expected, coupled with large supplies of cold storage beef, will pressure cattle prices in the near term, according to a Texas A&M AgriLife Extension Service livestock economist.

David Anderson, livestock economist in College Station, said the recent cattle on feed report released by the U.S. Department of Agriculture depicts fewer heifers placed on feed, signaling continued expansion among producers across the country.

“The report has indicated the running themes we have had throughout 2015, which has been fewer placements and a trend in placing heavier animals,” he said. “This is being driven by fewer cows and calves in 2014 and continued in 2015. There were heavy financial losses by cattle feeder operators in 2015. They paid premiums for those animals and then the market dropped lower, forcing them to hold onto to those feeders and add more gain to compensate for the premium they paid.”

The USDA report indicated placements were slightly lower, about one percent less than the year before, Anderson said.

“More cattle were placed weighing over 700 and 800 pounds while total placements declined,” Anderson said. “The report indicated fewer placed, but heavier. The result of the cattle on feed report was half a percent lower than the year before. I think as the market digests this there will be bearish talk in terms of the futures market because placements are bigger than expected and marketings are lower than expected.”

Anderson said the report also included a quarterly breakdown of heifers on feed.

“This report historically goes back to 1996,” he said. “We found in the latest report this was the fewest number of heifers on feed Jan. 1 than in the past 20 years. This gives you more evidence of the strength of expansion going on. We’ve got more steers on feed than a year ago and a record low number of heifers on feed.”

Anderson pointed to another report, the beef cold storage report, that indicated a record supply of beef on hand.

“Throughout 2015, we built up a record supply of cold storage of beef,” he said. “In December, we put more beef in cold storage, more than we did in November. This points out there is a heck of a lot of beef in cold storage. In this case, it’s due to record imports of beef that we brought in, because of record high prices, strength of the dollar and drought in Australia. When it comes here it has to stay somewhere cold, so it stays in the cold chain.

“Going forward, most cold-storage beef is boneless beef that is made into ground beef. That’s a large supply we’ve got to work off going through 2016. As beef imports back off during the year, it will help bring those storage amounts down.”

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Spell Check

Wyola, MT
1/28/2016 06:15 AM

  Well, at least you had the guts enough to say that all the beef in cold storage mostly came from imported Australian cattle, and was not somehow due to the US cattleman's "overproduction" that people like to throw around. As far as less heifers in the feedlot and supply chain right now, it is talk like this that drives market prices down with its psychological impact, and not due to any real impact in the immediate future. The law of supply and demand dictates, that even if you ANTICIPATE having more of something in the future, that "projected" amount, is still not yet in the supply chain, so that expected inventory does not count to fill orders right now, as it does not exist yet. These heifers in the country, kept in 2015, can't calve until next year 2017, so their impact should not effect markets toward a downward trend, because they are not contributing anything yet. It is thinking like this, that causes real producers money, and not middlemen and the Packers. In another article I just read, someone quoted that the "meat industry" lost $897 million last fall due to the cattle market price drop. Sure someone lost that money, but it sure wasn't the Packers. like the article tried to make out. That is probably how much more the Packers pocketed, since beef prices in the meat case didn't fall at all, and in some case even increased. No, that $897 million, was extracted directly out of the pockets of the ranchers that calved those animals, and the feeders who fed them. Now that's who lost, and talk like this, in this article, just helps make things worse. With the USA being the global standard that the world looks to for food safety, and the highest quality beef, it is not us that should have to become more "Globally" competitive, but the other countries who strive to meet OUR standard.


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