Economist: Cattle numbers continue to tighten
The inventory of cattle and calves in the U.S. is tightening, and that trend likely will continue for the foreseeable future.
Published: Sep 22, 2012
USDA in its monthly cattle on feed report released Friday reported the number of cattle and calves in U.S. feedlots as of Sept. 1 totaled 10.64 million head, down 1 percent from a year ago.
Meanwhile, placements in feedlots in August totaled just 2 million head, down 11 percent from last year.
Marketings of fed cattle totaled 1.96 million head, down 5 percent from a year ago.
“This will be viewed as a somewhat bullish report,” Derrell Peel, livestock economist at Oklahoma State University, told FarmWeek. “Placements and marketings were on the lower end of expectations.”
In fact, placements in feedlots so far this year have declined 4 percent compared a 3 percent gain the first eight months of 2011.
Placements by weight indicate the number of lighter weight animals is dwindling, the economist noted.
Placements in the lightweight categories so far this year have declined anywhere from 6 percent to 10 percent compared to last year when placements in the lightest weight category were up 19 percent.
“Overall, the (inventory) numbers are getting tighter,” Peel said. “It’s changed the placement pattern in feedlots.
“Last year, we were living on the lighter-weight placements,” he continued. “We’re pretty much at the end of that rope.”
The situation is expected to boost cattle prices late this year and into next spring.
But a possible rise in cattle prices is dependent on consumers’ appetite for beef at higher prices.
“Clearly, demand is the limiting factor,” Peel said. “Higher (cattle and beef) prices will restrain consumption. It has to because we will produce less beef.”
Peel predicted cattle prices this fall could rise and possibly peak in the spring.
“Fed cattle prices will go up, and I look for a spring peak, which could be an all-time record,” he said. “How high depends on demand.”
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