3 February 2007

3 minute read

North America

Ron Plain

The number of cattle on feed January 1 in feedlots with a one-time capacity of 1,000-head or more was up 1.4% from a year earlier. This was more than double the increase expected by trade estimates, which was a 0.6% increase.

Placements of cattle on feed during December were down but less than trade estimates. The placements were down 9%, while the trade estimate was for a decline of 11.2% from 12 months earlier. Fed marketings during December were down 5.2% and the trade estimate was for a decline of 4.4%.

The futures market for live cattle on Monday responded to the report with modest declines on all contracts.

All weight categories of cattle placed on feed during December showed decline, but the largest declines were lightweight cattle. Finally, cattle feeders are responding to higher corn prices by placing heavier weight cattle on feed that will require a shorter feedlot time.

The number of cattle placed on feed weighing less than 600 pounds during December was down 18.3%, the number placed weighing between 600-699 pounds was down 9%, the number placed weighing 700-799 pounds was down 2.3% and the number placed on feed weighing 800 pounds or more was down only 1.5% from a year earlier.

Practically all the increase in the number of cattle on feed January 1 was heifers. Steers on feed were up less than 0.1%, whereas the number of heifers on feed was up 3.8% compared to the same date in 2006. This is additional support for the belief that cattle producers have slowed if not stopped the growth in the cattle herd. The January 1 cattle inventory by USDA was released this Friday afternoon, a brief summary is at the end of this material.

The demand for beef continued to show weakness through December with a decline for the year of 4.4% from 2005. Due to larger exports and smaller imports of beef, the demand for fed cattle for the year of 2006 was up 2.9% from 12 months earlier.

The live price for fed cattle through Thursday showed a weighted average price for the five-market area of $85.85 per cwt, up $0.10 per cwt from a week earlier. The weighted average carcass price for the five-market area was down $0.69 per cwt at $137.31 per cwt.

Wholesale beef prices Friday morning showed Choice beef down $5.20 per cwt from a week earlier at $141.28 per cwt. Select beef Friday morning at $134.36 per cwt was down $2.60 per cwt from 7 days earlier.

The number of cattle slaughtered this week under Federal Inspection was estimated at 645 thousand head, up 8.2% from a year earlier.

Compared to the last fully established feeder cattle market at Oklahoma City on January 8, feeder cattle and calves prices were $3-6 lower.

The price ranges by weight for medium and large frame number one steers were: 400-500 pounds $112-125.50 per cwt, 500-600 pounds $105-119.50, 600-700 pound yearlings $92-97.75 per cwt, 700-800 pounds $91-97 and 800-1,000 pounds $85-95.75 per cwt.

The growth in the U.S. cattle herd practically stopped during 2006. The January 1 cattle inventory showed 0.3% increase in the January 1, 2007 number compared to a year earlier.

The growth in the cow herd was stopped completely by the dry weather. The January 1, 2007 number of cows and heifers that have calved was down 0.1% from 12 months earlier.

The 2006 cow crop was estimated to be 8,000 head smaller than in 2005, which was less than a 0.1% decline.

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