November again reversed the direction of the cattle market. Fed cattle in the Amarillo area drifted slightly lower, ending the month in the low $60s.
The monthly average was up $1 higher than October. The feeder cattle market also weakened slightly in November but not as much as the feds. As more heavier feeders moved into feedlots during the month, the price directions varied considerably by weight groups.
USDA Viewpoint The Economic Research Service of the U.S. Department of Agriculture recently released its "Livestock, Dairy and Poultry Situation and Outlook Report." This is an important analysis and contains some excerpts about cattle and beef worth quoting.
* Large female slaughter continues to point toward lower cattle inventories over the next couple of years. Although feedlot placements have been below year-earlier levels since midyear, on-feed inventories remain well above average and fed cattle marketings will continue large through mid-winter with weights remaining seasonally heavy.
However, the prospects of reduced beef production over the next two to three years and the recent concessional beef sales to Russia will help support prices during the transition to lower supplies.
* Profitability will return to the industry in 1999, but record pork and poultry supplies will hold down price gains.
* Drought has affected female retention over the past couple of years, with large numbers of heifers again placed on feed this past spring and summer. Thus, even as cattle inventories declined, beef supplies increased. Beef cow and heifer slaughter remain large, reflecting continued poor forage prospects in most of the southern states.
Although moisture conditions are much improved, pasture and hay prospects remain poor for the 1998/99 winter supplemental feeding period.
* Beef output in 1998 will be near record levels largely the result of dry conditions in much of the southern half of the country. This will be the largest production since 1976 when massive herd liquidation was beginning from the record 1975 cattle inventory of 132 million head.
* Per capita beef consumption is expected to decline from 68 lbs. in 1998 to about 63 lbs. in 1999. Retail prices for Choice beef averaged $2.74 in September and $2.75 in October and are expected to begin a moderate rise over the next couple of years.
* Choice fed steer prices averaged near $59/cwt. this summer and are expected to average in the mid-$60s by late this fall and the mid-$70s next spring as the cookout season begins. Prices for yearling feeder cattle should rise well into the mid-$80s next spring and through the second half of 1999.
Cattle Feeding Cattle and calves on feed for the U.S. slaughter market in feedlots with capacities of 1,000 head or more totaled 10.76 million head on November 1. That's 2% below a year ago, but 7% above the November 1996 level. Even though the total number is down, California, Colorado, Oklahoma and South Dakota reported larger inventories.
Marketings of fed cattle in October were 1.77 million head, 2% below the October 1997 movement but 4% above 1996. States with larger marketings were New Mexico, Oklahoma and Texas.
Placements of cattle and calves into feedlots in October totaled 2.83 million head. That's 3% below October 1997 and 6% lower than in 1996. Colorado and Kansas - actually recorded larger than year-ago placements.
Feeders placed on feed by weight groups were substantially lower in every category except the heaviest weights. This same situation occurred in September, emphasizing the increased interest in heavier feeders.
Expectations For 1999 This year should bring smiles to most cattlemen. Fed cattle prices are expected to improve, reaching the high $60s to mid-$70s by the second quarter. Feeder cattle and calves will respond to the improved fed cattle market. By early spring, feeder prices should be solidly in the high $70s to low $80s.