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OSU Livestock Market Economist Derrell Peel Sees Improving Cattle Industry Conditions in Last Friday's Cattle on Feed Report

Mon, 23 May 2016 15:50:50 CDT

OSU Livestock Market Economist Derrell Peel Sees Improving Cattle Industry Conditions in Last Friday's Cattle on Feed Report Mondays, Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel looks at last Friday's Cattle on Feed Report and where we stand in the southern plains with pasture and range conditions.

"Feedlot inventories on May 1 were 10.78 million head in feedlots over 1000 head capacity.  This is up 1.3 percent from May 2015.  Placements in April were 107.5 percent of year ago levels; the third straight monthly increase in feedlot placements.  April marketings were 101.2 percent of last year. The contrast between last year and this year in the feedlot industry is telling.  In 2016, it is clear that feedlots are building inventories; placing more cattle in the face of larger feeder cattle supplies.  Marketings are also higher now and turnover rates have increased.  One year ago, placements were low but feedlot inventories were steady because marketings were slow and feedlot turnover was sluggish. 

"Though feedlot inventories are now above year earlier levels and climbing, the industry is in better shape; leaner and more agile going into larger cattle supplies for the remainder of the year.  Cattle slaughter is up 2.7 percent for the year to date but is up 4.4 percent year over year in the past six weeks.  Seasonally, the largest cattle slaughter will occur in the next month but feedlots have pulled cattle ahead in April and May which will temper seasonal slaughter peaks in June.  More importantly, aggressive feedlot marketings have brought carcass weights down dramatically. In the latest carcass data, steer carcass weights, at 862 pounds, dropped below year earlier levels for the first time since June, 2014.  Overall cattle carcass weights, with steers, cows and bulls all down year over year, are below year earlier levels for the first time since the last week of 2013. Heifer carcass weights remain slightly above year ago levels but have also fallen sharply in the past few weeks.

"Beef production is up three percent for the year to date and will increase in the second half of the year with increased cattle slaughter.  Carcass weights are likely to show little if any year over year increase in the second half of the year and will moderate year over year increases in beef production.  Beef production is estimated to be up roughly 4 percent in 2016 compared to 2015.

"Emerging dry areas in the northern and southern plains in April have been almost entirely eliminated in the past month.   Overall, pasture and range conditions in the U.S. include only eight percent poor to very poor conditions.  Regionally, the west, including the Rocky Mountains, has 11.25 percent poor to very poor; the Great Plains has 6.7 percent poor to very poor; the Southern Plains is at 9.5 percent; and the southeast has 10.25 percent of pastures in poor to very poor condition.  Though dry to moderate drought still covers much of the southwest, the area of extreme to exceptional drought in southern California has continued to shrink.  El Niņo is weakening and La Niņa is expected to develop this fall and winter.  This may have implications for winter and for 2016-2017 conditions.  At this point, 2016 is largely in the bag from a forage standpoint.  It could still get dry and impact conditions late in the summer but the majority of forage production is assured from current moisture conditions.



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