Feedyards Brace for Tough Stretch

USDA’s July cattle on feed report will be viewed by cattle feeders as rather negative for slaughter steer prices, due mostly to larger than expected placements of cattle into feedlots during June.  For the balance of the year cattle feeders will be gushing red ink.

USDA reported that the 10.4 million head of cattle on-feed (1,000 head plus capacity feedlots) was 3 percent above a year ago as of July 1.  The average of pre-report estimates was for a year-to-year increase of 2 percent.  Compensating some for that was news of the mid-year estimate from USDA of cattle on-feed in all U.S. feedlots, which had a more modest 2 percent year-to-year increase as of July 1.

Cattle on feed in U.S. feedlots with 1,000 head or more capacity accounted for 87 percent of the total cattle on-feed as of July 1, up 1 percent from a year ago.

All of the year-to-year increase in the number of cattle in feedlots was due to steers.  Steers on-feed were up nearly 7 percent (426,000 head).  USDA reported heifers on-feed at 4.5 percent  below a year ago.     

Additionally, reported marketings were below pre-report estimates.  Cattle feeders placed 1.77 million head in June, 7 percent more than a year ago.  All of the annual increase in placements was in the heavier weight categories (over 700 pounds), with a surge in placements of cattle weighing over 800 pounds (up 41 percent).  Those heavyweight cattle entering feedlots came on the heals of a large increase (125,000 head) in cattle weighing 800-pounds and more during May.  The bulk of cattle placed in the heavyweight categories in May and June will be slaughtered in September through November.      

USDA reported lower than anticipated marketings during June.  Feedlot marketings in June were 0.6 percent below 2004’s.  Marketings have been delayed in recent months, especially in the Southern Plains.  Slaughter cattle live weights in the Texas/Oklahoma feeding region have surged and are record high for this time of year.

- Livestock Marketing Information Center