On Friday, July 25th, the USDA-NASS monthly Cattle on Feed report, showed an on-feed inventory number that was near expectations, although both placements and marketings were lower than pre-report estimates suggested. As of July 1st, USDA reported the total number of cattle on feed in feedlots with a capacity of 1,000 head or more at 10.3 million head, four percent below last year and one percent below the 2002-2006 average. Also, in the mid-year cattle inventory report, USDA showed the number of cattle in all U.S. feedlots was 5 percent below a year ago, indicating that the smaller feedlots that are not surveyed monthly continue to shrink their cattle feeding activities.
According to the report, feeders placed a total of 1.51 million head during June, down 9 percent from 2007 and 22 percent less cattle than in June of 2006. As expected, the majority of feeder cattle placed last month were in the heavier weight categories. Of note, on a state basis, the only states to report an increase in placements were New Mexico and Oklahoma, while the largest declines were reported in Colorado and Iowa. Feedlots marked 1.97 million head in June, nearly 8 percent below a year ago and the lowest June marketing number reported since USDA began this report. The year-to-year decline in marketings was larger than expected given historical relationships to steer and heifer slaughter adjusted for imports from Canada.
Of note, the USDA reported the quarterly breakdown of steers versus heifers on-feed. As of July 1, the number of steers in feedlots was down 5 percent (down 310,000 head) but the number of heifers was down only 3 percent (down 105,000 head). Relatively larger number of heifers on-feed is a trend that is expected to continue for the balance of 2008 and likely throughout 2009.
As the summer quarter progresses, placements of cattle into feedlots will rebound and average weight of cattle placed could increase. Placement patterns and placement weights will be the keys to quarterly beef production levels in late 2008 and throughout 2009. The result could translate into rather large swings in fed cattle marketings and prices.