The cattle market improved a little during March. Fed Choice steers in the Amarillo area ended the month about $2 higher than April.
In contrast, feeder cattle and calves displayed a slight amount of weakness. They managed, however, to end March at almost exactly the same price as month earlier.
Industry Structure For the first time, USDA has published the number of feedlots, inventory and marketings for the U.S. in its March Cattle-On-Feed report. This new information will provide a more concise picture of the cattle feeding industry structure. It should help producers better understand how the beef industry's pricing system operates.
During 1997 there were 108,000 farmer-feeders operating in the U.S. In addition, there were 2,075 feedlots with capacities of 1,000 head or more. Total fed-cattle marketings last year reached 26.8 million head, 85% of which were produced in larger commercial feedlots.
Six states, Nebraska, Iowa, Kansas, Colorado, Texas and South Dakota, each had over 100 of these larger feedlots. The states that marketed the largest numbers of feedlot cattle were Texas, Kansas, Nebraska and Colorado. What's more interesting is the combination analysis of feedlots and volume. The data shows that Texas had an average of 39,456 head marketed per lot and Kansas averaged 26,718 for each feedlot.
Cattle Feeding Statistics Cattle and calves on-feed for the U.S. slaughter market in feedlots with capacities of 1,000 head or more totaled 10.37 million head on March 1, 1998. That was up 1% from a year ago but down 4% from month earlier.
The major cattle feeding state, Texas, recorded a 5% gain over a year ago. Kansas, the second most important feeding state, had 4% fewer and Nebraska reported a 3% increase.
The fed-cattle marketings level at 1.8 million head was almost exactly the same as a year ago. It was, however, down sharply below the month earlier figure. Forecast equations suggest larger marketings in March and then a slightly lower level in April. In both cases, however, neither month should have excessive marketings.
The most startling figure in the cattle feeding report was the March placements. At 1.45 million head, this was a 19% drop from a year ago and 15% from a month earlier. It also represents the lowest placement level since June 1997.
Numbers of cattle and calves placed on feed by weight groups has also shifted somewhat. With feedlot placements down 19%, all weight groups reported sharply lower numbers, except the heaviest feeders. The lightweight feeders, those less than 600 lbs., represented their smallest proportion to the total since early 1996.
The Market Ahead Placements into feedlots were up substantially from April to September of last year. Then, they suddenly dropped, with October through February placements sharply below the previous year's level.
As we move into spring, feedlot marketings should move even lower, allowing some fed cattle price improvement. It's possible, however, that this better market may not be very substantial for at least a couple of months. The significant reductions in last fall's placements should shortstop the summer weakness that has come during the last couple of years.
Feeder cattle and calves should retain their premium price position over feds throughout 1998. With increased feedlot losses, due to the high feeder prices of last year, the demand for feeders may slack off somewhat. This could allow premiums to shrink some for the rest of the year.