Drought, feed costs drive feedlot numbers

By Jessica Domel

The number of cattle in American feedlots suggests the cattle industry is back to pre-2012 drought levels.

Dr. John Newton, director of Market Intelligence for the American Farm Bureau Federation, said the number of cattle on feed has increased for 21 out of the last 24 months.

“A report revealed that Jan. 1 cattle on feed was at about 11.5 million head. That’s up eight percent over prior year levels,” Newton said. “I think one of the things that we’ve seen with cattle inventory levels above 11 million head for several consecutive months is we’re back to where we were pre-2012 drought with the number of animals in feedlots.”

The Dec. 1 Cattle on Feed report from the U.S. Department of Agriculture (USDA) saw the largest volume increase in more than a decade with about 850,000 head.

The Jan. 1 report was for about 884,000 head more.

“For two consecutive months, we’ve seen the volume of animals added on feedlots increase more than we’ve seen in the last decade. I think that has something to do with some of the forage availability and the dry weather conditions that we’ve seen across the Plains leading animals into feedlots. Low costs of corn and soybeans have led to cheaper livestock feed prices increasing the demand for animals on feedlots,” Newton said.

If the weather continues to be dry, we could see continued demand for cattle on feedlots, Newton said. That could mean continued returns to cattle producers throughout the year.

If demand softens or marketing levels decrease, it could present a problem for beef producers.

“We need to see the marketings continue. I think we will see that continue if we’re going to meet the expectations of record beef production in 2018,” Newton said. “We’re going to see those animals need to move through the slaughtering channels, so that’s something that does need to continue if we’re going to keep returns to cattle producers at profitable levels.”

The average American consumer will eat 222.2 pounds of red meat and poultry this year, according to USDA.

“We’re looking at record poultry and pork production across the board. It’s going to be very competitive in the livestock sector in 2018,” he said.

Some good news, according to Newton, is a rising number of cattle on feed means more feed use.

“It does bode well for the consumption of feed grains. We’ve got 2.5 billion bushels of corn in inventory. So the more animals we have on feed does help to move some of that grain into that marketing channel. That should improve grain prices if we continue to see that volume of animals in feedlots,” Newton said.

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