There was finally a spark in the markets last week, thanks largely to the Jan. 30 semi-annual USDA cattle inventory report, which also reflected a downward revision in numbers based on the recently completed 2007 Agriculture Census (see “Supply Fundamentals Offer Optimism” elsewhere in this newsletter).

According to USDA’s Agricultural Marketing Service (AMS), feeder cattle traded at steady money to $2 higher, while calves brought mostly $1-$4 more than the previous week. Fed-cattle sales were sluggish in the Northern Plains, while Southern Plains feeders stood firm and declined to trade for what was being offered. They were glad they did. Monday, moderate trading in the Southern Plains was $1-$3 higher at $83; dressed sales in Kansas were $4 higher at $131.

“When counting just beef cows, the inventory report showed a 2.7% decline compared to the original report last year. This is very significant, but the average market watcher could have rationalized an even sharper decline, given that last year’s beef-cow slaughter was 12.3% larger than 2007, and 23.1% larger than the five-year average,” say AMS analysts. “Basically, domestic cattle producers have deeply and progressively culled their cow herds, which leaves fewer numbers of calves to raise for beef and even tighter supplies when these producers retain heifers for replacements.

“But, there are fewer places to graze cow herds after the recent expansion of cropland (following record-high grain prices) and the continued expansion of urban development and grassland conservation activities (see “Available Farmland Declines” elsewhere in this newsletter). Plus, the areas of our country that produce the largest numbers of beef cattle have nearly all experienced extreme drought over the last few years and restocking has been conservative. Many industry participants expect the tighter supplies of available feeder cattle to become even more evident within the next year or two. Hard economic times and severe closeout losses in the cattle-feeding business have largely kept the feeder-cattle market in check.”

Given the positive supply situation, demand will drive prices as we move forward.

The summary below reflects the week ended Feb. 6 for Medium and Large 1 – 500- to 550-lb., 600- to 650-lb. (calves), and 700- to 750-lb. feeder heifers and steers (unless otherwise noted). The list is arranged in descending order by auction volume and represents sales reported in the weekly USDA National Feeder and Stocker Cattle Summary:

Summary Table
State Volume Steers Heifers
Calf Weight 500-550 lbs. 600-650 lbs. 700-750 lbs. 500-550 lbs. 600-650 lbs. 700-750 lbs.
Dakotas 40,800
SD
ND

$113.73
$114.72

$105.05
$108.93

$96.66
$97.56

$100.56
$99.94

$93.81
$94.41

$88.02
$86.65
MO 40,000 $114.05 $102.97 $94.78 $98.30 $91.36 $87.88
NE 32,000 $117.81 $105.74 $97.27 $102.32 $97.722 $90.34
OK 27,000 $108.71 $99.02 $94.44 $94.12 $90.12 $88.30
TX 19,700 $99.78 $95.31 $92.86 $88.33 $84.00 $83.43
IA 14,600 $112.13 $104.00 $96.26 $97.99 $92.30 $86.51
KS 12,400 $116.79 $102.89 $95.87 $99.83 $91.84 $88.89
CO 8,300 $110.16 $101.10 $94.44 $92.07 $89.98 $86.76
KY* 7,600 $99.16 $88.56 $86.14 $78.27 $74.56 $74.944
AL 6,000 $96-103 $84-913 $80-86.505 $79-89 $73-803 $72-785
GA*(***) 6,000 $80-105 $72-95 $70-87.75 $74-94 $68-82.25 $64-84.504
NM 6,000 $102.01 $97.37 $90.48 $88.70 $84.91 $80.08
WY 6,000 $119.63 $107.41 $95.69 $103.94 $96.292 $84.536
Carolinas 5,900 $81-102 $77-90 $70-86 $69-85 $65.50-80 $61-73
MT 5,200 $112.37 $97.704 $93.45 $97.77 $87.174 $83.87
AR 5,100 $91.39 $85.63 $82.144 $88.03 $84.75 $84.224
FL*(***) 5,100 $79-108 $77-96 $80-81 $70-90 $80-89 $70-764
MS* 4,000 $85-921 $75-863 ** $77-891 $70-783 $72-765
TN* 4,000 $94.64 $87.46 $84.82 $81.78 $76.23 $72.79
LA* 2,500 $78-103 $85-95 $78-894 $78-96 $75-85 $75-814
VA 2,300 $104.24 $89.10 $81.68 $80.732 $78.09 $77.156
WA* 1,600 $98.42 $93.11 $85.156 $87.73 $83.33 $82.894

* Plus 2
** None reported of the same quality at this weight or near weight
(***) Steers and bulls
(?) As reported, but questionable
NDNo Description
1500-600 lbs.
2550-600 lbs.
3600-700 lbs.
4650-700 lbs.
5700-800 lbs.
6750-800 lbs.
7800-850 lbs.