Cattlemen will likely continue to liquidate cattle numbers until profitability can be achieved.
The U.S. beef cowherd is expected to continue to decrease in the coming months and year, primarily due to a lack of profitability, high production costs, competing meats, and alternative uses of land.
The lack of profitability by the majority of cow-calf producers can be attributed to weak demand caused by the severe recession, says Walt Prevatt, Auburn University Extension economist.
High production costs, says Prevatt, include those for feed, fertilizer, labor and land rents. “We’ve also seen pasture acreage moving into grain production and/or conservation programs and other non-farm uses such as recreation and rural non-farm development. Given the current lackluster level of profits and immense uncertainty in the U.S. general economy, cattle farmers will likely continue to liquidate cattle numbers until profitability can be achieved,” he says.
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Every Friday, Steve Kay, editor of Cattle Buyer's Weekly, provides a weekly roundup of cattle-market activity at beefmagazine.com. Read the latest below.
CATTLE ON FEED REPORT
USDA released its monthly Cattle On Feed (COF) report Friday afternoon. The numbers for U.S. feedlots 1,000 head or larger were:
COF Nov. 1: 11.487M head, 103.2% of a year ago
Placed in October: 2.504M head, 101.2%
Marketed in October: 1.734M head, 98.8%
Analysts regarded the report as neutral. October placements were 1.4% larger than the average forecast but all the year-on-year increase came in the lightest weight category, under 600 lbs. Those placed in this group were up 110,000 head or 17.9% on last year. The next weight category, 600-699 lbs., saw 5,000 fewer cattle placed, while the 700-lbs.-and-up category saw 75,000 or 6.2% fewer cattle placed. October marketings were just below average estimates. This and the larger placements made the Nov. 1 COF total 0.4% larger than forecast.
Only two of the featured states, Arizona and California, had smaller Nov. 1 COF totals than last year. The COF totals for Kansas and Texas were each up 3% while Nebraska’s total was up 1% and Iowa’s total was up 13%. Washington’s total was up 24%, the largest percentage increase. South Dakota’s total was up 12%. Of the major states, Texas placed 5% more cattle than last year but Kansas and Nebraska each placed 6% fewer cattle. Colorado placed 10% more while Iowa placed 15% more. Kansas marketed 3% more cattle than last year while Texas marketed 4% fewer and Nebraska marketed 3% fewer.