For the foreseeable future, feedlots are faced with the dilemma of feeding cattle that don’t pencil out economically, having too few to feed or both.

That’s how Oklahoma State University (OSU) analysts sized up the feedlot sector’s ongoing struggles last week.

“Not only are feedlots paying record prices for feed and essentially record prices for feeder cattle, it has been recognized for quite a while now that the supply of feeder cattle will be increasingly inadequate to maintain feedlot inventories at any price,” says Nathan Anderson, Payne County Extension director and agricultural educator for Oklahoma State University (OSU).

Anderson and Derrell Peel, OSU extension livestock marketing specialist, explain feedlots maintained inventories by feeding lighter and younger animals for longer periods of time when cattle numbers peaked in the 1970s and began to decline.

“Feedlot inventories represented slightly less than 11% of total cattle numbers and 31% of feeder supply,” Peel says. “This last figure means that there were approximately three feeder cattle available to replace every animal already on feed at the beginning of the year.”

By the 1990s, Peel says feedlot inventory represented nearly 13% of total inventory and more than 40% of feeder supply. So, there were typically fewer than 2.5 replacement cattle available for every animal in the feedlot.

In the last decade, feedlot inventories represented almost 15% of total cattle inventories and 51.4% of feeder supplies.

In 2012, Peel explains the Jan. 1 feedlot inventory was 14.1 million head, a record 15.6% of total cattle inventories and 54.9% of feeder supplies. In other words, there are currently 1.8 feeder animals available for every animal in feedlots.

“Obviously, the only possibility for this level of feeder cattle supplies to maintain feedlot inventories is with the very slow turnover rate that comes with feeding ever lighter and younger animals for long periods of time,” Peel says. “Corn prices that average twice the historical level and currently are 3.5 times historical levels make this economically infeasible.”

Peel adds, “The already high pressure resulting from chronic excess feedlot capacity will increase sharply in 2013 and 2014.”

Ultimately, Peel and Anderson say that expanded beef cattle inventories will allow feedlots to respond appropriately to high corn prices by placing heavier cattle and reducing days on feed.