Senior Farm and Ranch Broadcaster, Ron Hays, is talking with Oklahoma State University Livestock Market Economist, Derrell Peel, about the latest USDA Cattle on Feed Report released on January 19, 2024.
In the January Cattle on Feed Report, Peel said placements in the month of December came in at 96 percent of a year ago. Peel said marketings in December came in at 99 percent of a year ago.
Peel said the on-feed total for the report was 102 percent of last year.
“We are still carrying more cattle compared to a year ago into the new year, but this report was very close to expectations,” Peel said. “No surprises. I don’t think there will be any market reaction to it from the standpoint of the general report.”
Peel said the fact that cattle numbers peaked in 2019 and have been declining for five years says that at some point, feedlot inventories will come down. Due to drought and strong markets last fall, Peel said the industry has been pulling cattle ahead.
“One of the things we continue to do is place and feed a lot of heifers,” Peel said.
For the short run, Peel said feedlot inventories have been held longer than he expected.
Heifers on feed for January have shown a fractional decrease from October, Peel said, but they are still making up about 40 percent of cattle in the feedlot.
“If you look at the absolute number of heifers on feed, the breakdown of steers and heifers, that data goes back to 1994,” Peel said. “This is the largest January heifer on feed total in that data series.”
There is still no herd rebuilding in sight, Peel said, as it appears the initial steps have not been taken to start that process.
Over on the dairy side, Peel said the fact that sex semen is being used to produce heifers means that part of the bigger heifer crop can be attributed to the dairy industry.
“In my travels over the last two to four weeks, it appears pretty strongly that we have more stocker cattle out on wheat in the southern plains, at least in Oklahoma, than we have had in several years,” Peel said. “Obviously, a significant number of those are heifer calves. The cow-calf producers may have sold their heifers because they needed the money.”
Even if the cow herd rebuilding process starts today, Peel said, the best result that would come from those actions would be stable cow numbers compared to January 1st.
“It is going to be a slow rebuild process that really probably couldn’t start much now before 2025,” Peel said.
With weather and other factors at play, Peel said there is no guarantee that liquidation will come to a halt in 2024.
“If we do, then I think the best that can happen is that we just stabilize,” Peel said. “It is going to be a lengthy process here. If you start with a heifer calf in 2024, you are talking about 2026 to 2027 before you see any increase in beef production.”
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