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Cattle-on-feed numbers offer hint of beef industry direction

 

 

By DOUG SCHMITZ

Iowa Correspondent

 

GARNER, Iowa — The one thing Ed Greiman said he’s learned over time is never bet against USDA reports – whether or not they are delayed.

"Going forward, the real question is: Where are the cattle going to be fed?" he said.

The Garner, Iowa, cattle producer owns Greiman Brothers, a 2,000-head feedlot operation, alongside his brother, Matt, who runs the cow-calf side; Ed operates the feedlot side of the business.

"Someone is not going to have as many calves to feed as they would like, which means there’s going to be an area or region in the U.S. that’s going to have substantially fewer cattle on feed," said Greiman, president of the Iowa Cattlemen’s Assoc. in Ames.

Because of what the federal government claimed were budget restrictions, last year’s July cattle report wasn’t issued, which left a one-year delay in consistent, official cattle tallies, while leaving many U.S. cattle producers wondering exactly where the industry was – and where it was going.

Released on July 25, along with the Cattle Report, the USDA July 1 Cattle-on-Feed Report indicated that cattle-on-feed numbers were down 2 percent from July 2013.

"The lower number of cattle on feed, fewer feeder cattle outside feedlots, smaller 2014 calf crop, and some heifer retention all point to continued historically tight cattle supplies in the months ahead," said Tim Petry, livestock economist at North Dakota State University Extension Service in Fargo, N.D.

The report said all U.S. cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 10.1 million head on July 1, 2014.

What’s more, the inventory included 6.46 million steers and steer calves, down 1 percent from the previous year, which accounted for 64 percent of the total inventory.

Heifers and heifer calves accounted for 3.6 million head, down 5 percent from 2013, the report added.

"The drop in heifers compared to steers gives the impression of an effort to build the herd," said John Riley, assistant professor of agricultural economics at Mississippi State University in Starkville, Miss.

"This is similar to last quarter’s report where heifers on feed on April 1, 2014, were 5.9 percent below the same period in 2013," he added. "So, it is possible that more heifers are being held off of feed with the intent of bringing them into the breeding herd."

Moreover, the report said placements in feedlots during June totaled 1.46 million, 6 percent below 2013, with net placements at 1.38 million head. During June, placements of cattle and calves weighing less than 600 pounds were 400,000; 600-699 pounds were 245,000; 700-799 pounds were 320,000; and 800 pounds and greater were 490,000.

In addition, marketings of fed cattle during June totaled 1.85 million, 2 percent below 2013, which is the lowest fed cattle marketings for the month of June since that series began in 1996. Other disappearance totaled 75,000 during June, 19 percent above 2013, the report added.

While both reports didn’t provide individual cattle number breakdowns for all U.S. states, Greiman said the last report he and his fellow cattle producers saw from the state of Iowa showed that the "under 1,000 head" feedlots were placing fewer cattle than a year ago.

"The ‘over 1,000’ yards in Iowa are maintaining their inventory," he said. "Part of that is because that’s their business, and they have to have cattle on feed. Iowa is well-situated to be the place where cattle are fed."

That’s because ethanol is a major component of Iowa’s number-one ranking in corn, as well as biofuels, "and along with ethanol comes more feed that’s available for cattle," he added.

On the other hand, Greiman said he doesn’t look for cattle prices to come down any time soon.

"The real key to the price of cattle and beef is what is happening in the pork and poultry and how tied to their markets are we," he said. "With cheap feed usually comes an increase in the production of both pork and poultry.

"Basically, the one thing to take away from these reports (both Cattle and Cattle-on-Feed) is that someone is not going to be able to feed the amount of cattle they would normally feed," he added.

To view the USDA July 1, 2014, Cattle-on-Feed Report, visit http://usda.mannlib.cornell.edu/usda/current/CattOnFe/CattOnFe-07-25-2014.pdf

8/6/2014