The cattle market has taken a break from the record highs after lower cash last week and a slightly negative Cattle on Feed Report. However, it may be too early to get bearish.
USDA put the on feed number 4.4% below a year ago, with placements down .6% and marketings down 1.2%. While the on feed number was slightly above estimates, it puts total inventory in feedlots at 11.6 million head. This is the lowest number on feed since 2017 for this time period. It’s also coming off a record for the series in April of 2022 at 12.1 million head. Market analysts say this isn’t unexpected with the drought conditions that continue to persist in the Central and Southern Plains. And those numbers are likely to tighten even more going forward.
Scott Varilek, Kooima Kooima Varilek says, “We’re still going to well below year ago levels. well below, you know some of these historical levels. We know that the numbers are tight and they’re going to be that way for a substantial period of time. Maybe it’s a couple of years and says we’re still looking to see okay is the heifer or the heifers coming into the feed yard yet or not? And, and regardless, we’ve got a smaller cow herd we’ve got tighter numbers so these on feed numbers are going to stay tight.”
He also points out that while the placements number was above estimates, most of the increase came in the South and was tied to the lingering drought and the grazing situation. Texas saw the biggest increase at 105%, with range and pasture conditions at 58% poor to very poor and 52% of the winter wheat crop also receiving that rating. Varilek says, “We’ve heard about for wheat conditions in the south and looking for a home for those cattle. It was time for them to be placed. They had to be moved. We were hearing about different sale barns calling to the northern cattle buyers and saying hey, you better get down here. We’re going to have some big runs here in a short amount. of time. So, most cattle had to be moved pretty quickly and find a home so there’s a there’s a reason for your bigger placements in the south is basically going to be tied to the weather, dry conditions.”
Varilek says the higher placements may also mean a shift in the normal seasonal pattern of when cattle are ready for market with more ready in the late summer verses this fall. He stresses that there is no evidence of heifer retention yet indicated in this Cattle on Feed Report. He doesn’t think we’ll see the rapid expansion we did in 2015 because of higher interest rates, higher input cost and the persisting drought in cattle production areas.
