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Agricultural News

Dr. Derrel Peel on How COVID-19 provokes Turbulence in Feedlots

Tue, 26 May 2020 07:46:43 CDT

Dr. Derrel Peel on How COVID-19 provokes Turbulence in Feedlots 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 talks about COVID-10 Provoking turbulence in feedlots.

The details of the USDA Coronavirus Food Assistance Program (CFAP) became available last week. Cattle producers are eligible for direct payments for cattle sales between January 15 and April 15 and for maximum cattle inventories between April 16 and May 14. Signup begins May 26, 2020. Contact your local Farm Service Agency (FSA) office. More information is available at https://www.farmers.gov/cfap.

The latest USDA Cattle on Feed report shows the dramatic impacts of COVID-19 on fed cattle markets. The May 1 feedlot inventory was11.2 million head, down 5.1 percent year over year. April marketings were down 24.3 percent from last year, a decrease of 433,000 head year over year. Decreased marketings reflect the severe disruptions in cattle slaughter in April and continuing into May. This follows a 13.1 percent year over year increase in March feedlot marketings.   The average year over year change over March and April together was a 6.4 decrease in marketings. The slowdown in April marketings and resulting backlog of fed cattle in feedlots would have been more severe without the strong March marketings that pulled some cattle ahead. The backlog of fed cattle continued to build in May.

April placements were down a sharp 22 percent year over year and follow a 23 percent placements drop in March. Combined March and April placements were down 867,000 head from last year. This suggests that a significant drop in expected feedlot marketings starting mostly in September and into October. Of course, the delayed placements from March and April will show up starting in May and will be heavier but the delay will help feedlots have a chance to get current. The feedlot industry will spend much of the summer working through the backlog of fed cattle but the hole from March and April feedlot placements should provide a marketing window to catch up by this fall if not before.

Packing plant disruptions due to COVID-19 began in early April with a 19.3 percent year over year decrease in steer and heifer the week ending April 11. Year over year slaughter totals decreased for four weeks culminating in a 41.2 percent year over year decrease in steer and heifer slaughter the week ending May 2.   The beef packing industry appears to have made significant progress in restoring capacity the past three weeks with estimated total cattle slaughter this past week down 14.2 percent from year ago levels.



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