In today’s Beef Buzz, senior farm and ranch broadcaster Ron Hays speaks with livestock market economist Dr. Derrell Peel about the latest Cattle on Feed report, which showed placements down 12% from a year ago. With feeder cattle supplies tightening and feedlot inventories expected to decline, Peel said the industry is moving closer to a period when reduced cattle numbers will become more apparent.
Cattle on Feed Placements Fall 12%
Peel said October placements came in below market expectations, reinforcing the trend of fewer cattle entering feedlots. “The October cattle on feed report had placements down 12 percent from last year. Marketings were down 7 percent, and the on-feed total in this report was unchanged,” Peel said.
He noted that the report was somewhat more bullish than expected, with trade estimates calling for placements to decline by 8% to 9%. “This is the third month in a row of very sharply down placement numbers,” Peel said. “Placements are smaller than marketings, which means that on-feed inventory compared to a year ago is coming down.”
Peel expects feedlot inventories to move below year-ago levels in the coming months.
Tight Feeder Cattle Supplies Becoming More Apparent
Although feedlot inventories have shown relatively little decline over the past several years, Peel said that number does not tell the whole story. The flow of cattle moving through feedlots is shrinking as fewer feeder cattle are available. “The reality of where we are with feeder cattle numbers is really coming home to roost,” Peel said. “There’s less feeder cattle out there, and now I think it’s going to be harder and harder to sort of mask that going forward.”
Feedlots have maintained inventories by slowing cattle turnover and adding days on feed. However, Peel said that strategy can only delay the effects of tighter supplies. “Once you get everything slowed down, you’re kind of back where you were before, and the lack of numbers becomes much more apparent,” he said.
He expects feedlots to deal more directly with limited cattle supplies in the months ahead.
Heifer Retention Remains Limited
The quarterly report also showed the percentage of heifers in feedlots increased from approximately 37% in July to 38% in October. Peel said the figure suggests producers are not aggressively retaining heifers for herd expansion.
Heifer slaughter has declined by more than 11% so far this year, providing a different signal about the direction of heifer supplies. “We’re getting a little bit of mixed signals here,” Peel said. “But if we are in fact retaining any heifers, it’s at a very minimal level at this point in time.”
Peel said continued drought concerns have limited producers’ ability to rebuild their herds. Recent rainfall across the Southern Plains could help improve the outlook, particularly for wheat pasture and next year’s grazing conditions. “It’s one of the things that we need to have,” Peel said of improved moisture. “It may not be the only thing, but it’s certainly a first step and kind of a necessary step before you can really do much beyond that.”
Beef Prices Expected to Remain High
With beef production declining and tight supplies expected to continue, Peel said consumers should not expect significant price relief in the near future. “Beef production is down this year. We think it’s going to be down the next year and probably two years going forward,” Peel said. “So we’re going to continue to see tight supplies.”
Despite higher prices, Peel said beef demand remains strong, with no significant indication that consumers are abandoning beef. “In total, beef demand remains extremely strong, and higher prices are there,” he said.
Peel expects tight supplies to remain a defining factor in the market for several years. “I would say at this point we’re looking at close to the end of the decade before anything could change,” Peel said.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR above for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
