Dr Derrell Peel Breaks down the Numbers in USDA's Cattle on Feed, Inventory and Slaughter ReportsFri, 21 Jul 2017 16:26:00 CDT
This week, the US Department of Agriculture released three reports, offering insight into the beef cattle industry. Radio Oklahoma Ag Network Farm Director Ron Hays caught up with Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel, during the Oklahoma Cattlemen’s Association 65th Annual Convention and Trade Show, for his reaction to the numbers in these reports. To listen to Peel’s full analysis of the reports with Ron Hays, click or tap the LISTEN BAR below at the bottom of this story. Links to the actual reports are included below as well.
“Largely, I think these reports confirmed what we suspected was happening,” Peel said. “I don’t think there’s any big changes or surprises in these numbers.”
According to Peel’s interpretation of the data, the industry has continued to expand the size of the national herd in 2017, citing an 11% run up in heifer retention compared to the more modest 5% seen over the previous two years. Nonetheless, Peel also says the herd expansion is beginning to moderate.
“It’s suggesting that maybe we’re going to put the brakes on even more, going into 2018,” he said. “And beyond that, a bigger calf crop means we’re going to have bigger feeder supplies as well into 2018.”
He says this is congruent with the industry’s expectation of bigger beef production down the pipeline.
It is a challenge though, he says, with the largest herd expansion happening in 25 years, according to the historic data from USDA. But, at least it has come with a pleasant surprise.
“A pleasant surprise this year has been the strength of demand, both domestic and export, and we’ve had stronger than expected cattle markets, despite the supply challenges.”
But now that the reports have been released, Peel said the ball is in the market’s court.
“The trade is going to react to the placement number,” he said, referring to the monthly cattle on feed report. “They were expecting a relatively large placement, but the average was like a 106% - it came in at 116%. So, it’s a big number. The trade will probably react to that a little bit.”
Peel also reports that the marketing number was about as expected by trade at 104%, and actual on feed numbers he says is not much different than what was projected at about 102.7 to roughly 103%.
“That’s what it was about a month ago,” Peel noted. “What’s important to keep in mind, though, if you look at the placements, the biggest increases were in the lightweight categories and we haven’t been doing much of that - we’ve been generally placing heavier cattle.”
He says feedlots have made a lot of money in the last few months and with cost of gain so cheap at the moment, feedlots want to feed whatever they can.
“It probably doesn’t have much impact to it down the road, but we’ll see how the trade reacts to it,” he said.
You can listen to more highlights of the reports being discussed by Ron Hays and Dr. Derrell Peel, by clicking on the LISTEN BAR below.
To view the monthly Cattle on Feed report, click here.
To view the latest Cattle Inventory report, click here.
To view the Livestock Slaughter report, click here.
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