On Friday, the USDA released their monthly Cattle on Feed Report for June. Oklahoma Farm Report’s Ron Hays talked about the numbers provided by USDA with Oklahoma State University Livestock Market Economist Dr. Derrell Peel.
Dr. Peel says the Report does show a continuing trend of tighter feedlot supplies. May placements were at 92% of last year’s figures, with marketings at 90%, resulting in a total on-feed inventory of 99% of a year ago. While the report was largely anticipated, Peel noted that placements came in “a little lower than expected,” and marketings were “fractionally” down. “As you could call it slightly bullish,” Peel stated, “but I really wouldn’t expect a lot of the significant market reaction to this report.”
The absence of Mexican cattle, though not yet a major price driver, is a significant factor. If this trend persists for several more months, it could lead to a deficit of 800,000 to 900,000 head of cattle on an annualized basis, adding considerable pressure to already limited domestic feeder supplies. When you look to the state by state placements- you really notice the lack of Mexican feeders. Texas placements were down 17% compared to a year ago, and Oklahoma placements were down 22% compared to a year ago. It’s likely that both Texas and Oklahoma are seeing such drastic drops in placements because of the import ban on all Mexican cattle, due to concerns related the New World Screwworm.
Anecdotal evidence suggests that feeder cattle are being secured earlier this year, with buyers actively seeking and contracting cattle well in advance. Peel emphasized the urgency among feedlots: “Absolutely every feed lot is trying to secure supplies.” This sourcing challenge is particularly acute in the Southern Plains, where some feedlots traditionally rely heavily on Mexican cattle, a supply that has “completely dried up” for the time being.
Feedlots are exploring all avenues, including “looking farther afield than they normally do” and considering “beef on dairy supplies,” to maintain their inventories. Peel affirmed that the overall total on-feed number has been consistently lower than a year ago for about six months, a trend that points to increasingly tighter supplies. He predicts that this decrease in feedlot inventories will accelerate once more aggressive heifer retention begins, making the challenge of maintaining feedlot numbers “more obvious, you know, very quickly.”
Review the full report from USDA released on Friday by clicking here.
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