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Beef Buzz News


Derrell Peel Says Latest Cattle on Feed Report is Slightly Friendly for the Cattle Industry

Mon, 25 Oct 2021 10:03:16 CDT

Derrell Peel Says Latest Cattle on Feed Report is Slightly Friendly for the Cattle Industry The latest Cattle on Feed report has been released by the USDA. This month’s report also serves as the third-quarter report. Radio Oklahoma Ag Network Director Ron Hays spoke with Derrell Peel, extension livestock marketing specialist at Oklahoma State University, about the numbers. Peel said, all in all, the latest numbers make up a slightly friendly report for the cattle industry.

“The October Cattle on Feed report showed placements in September at 97% of last year,” Peel said. “Marketings in September were also 97% of last year and that gives us an on-feed total for October 1 of 98.6% of one year ago. All in all, I think this is probably going to be perceived as a slightly friendly report.”

The industry continues to make progress toward balancing the supply of fed cattle with demand from the packers and processors, according to Peel. The first half of the year saw cattle carried over from 2020 and its challenges, this year has proved challenging in getting out from under that bottleneck, he said. The latest Cattle on Feed report reaffirms that, he added.

“If you take a 12-month average of feedlot inventories, which is a way to compare them month to month a little more cleanly without seasonality, that number actually peaked in June, has been falling and should continue to fall now,” Peel said. “In a longer-term cattle cycle sense, we are past the peak numbers … moving into smaller numbers and that should continue from this point on.”

The capacity constraint has been an issue and continues to be binding, according to Peel. Many cattle processing plants are still reporting labor shortages due to the COVID-19 pandemic or the effects of the pandemic. Read more about that here.

“We got through the first half of the year from a slaughter standpoint from moving a fairly impressive number of cattle, given the circumstances, with Saturday slaughter,” Peel said. “But you cannot continue to do that, so we are probably seeing continued issues there.”

Peel said capacity may be getting tighter at the same time cattle numbers are getting tighter, which is why the cattle industry cannot get out from under the capacity constraint.

The latest report also gives insight into what beef cow herds may look like this spring, according to Peel. Drought in cattle country has pushed feed prices up and many producers have no choice but to liquidate their beef cow herds.

“We were already liquidating, but at a relatively modest pace,” Peel said. “We have been watching cow slaughter all year and it certainly elevated.”

As we hit the peak cow-culling season, Peel said the industry will get a better read on the beef cow herd situation soon.

“I do know that there is a slight increase, year over year, in the number of heifers on feed on October 1,” Peel said. “That may be another indication that some heifers that were initially intended for replacements were diverted into the feeder supply chain and are now in the feedlots.”

Click on the LISTEN BAR below to hear more from Ron Hays and Derrell Peel as they talk about the latest Cattle on Feed Report, including what producers can do to protect their business amid this challenging time.

The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.

   
   

Listen to Ron's conversation with Dr. Peel here.
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