In the state of Nebraska, cattle are very important, and are one of the largest economic engines for the state. This past year, drought conditions have impacted not only crop producers, but cattlemen as well. Poor pastureland and high feed costs make it very hard for these ranchers, and many have been forced to liquidate part or all of their herds.
This same scenario is also playing out across much of the continental U.S., and the number of cattle on feed has continued to decrease.
According to the USDA Cattle on Feed report, which was released on October 19, “Cattle and calves on feed for slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.0 million head on October 1, 2012. The inventory was 3 percent below October 1, 2011.”
The report continued, “The inventory included 6.96 million steers and steer calves, up slightly from the previous year. This group accounted for 63 percent of the total inventory. Heifers and heifer calves accounted for 3.97 million head, down 8 percent from 2011.”
In Nebraska, the statistics are more positive. According to USDA’s National Agricultural Statistics Service, Nebraska Field Office, Nebraska feedlots with capacities of 1,000 or more head reported 2.33 million cattle on feed as of October, 1. This is a five percent increase from last year and is the highest October inventory since 1994, when the data series was first collected.
However, the reason for more cattle on feed is due to environmental effects. “I guess part of what is in play there is the fact that we have seen significant drought conditions, not just in our state but in surrounding states as well, where we source feeder cattle from starting in early summer. This has accelerated cattle into feedyards because of a lack of grass. That is part of the driver for that on feed total,” said Jeff Stolle, Vice President of Marketing for the Nebraska Cattlemen’s Association.
According to the USDA report, “Placements in feedlots during September totaled 2.00 million, 19 percent below 2011. This is the lowest cattle placements for the month of September since the series began in 1996. Net placements were 1.94 million head. During September, placements of cattle and calves weighing less than 600 pounds were 515,000, 600-699 pounds were 355,000, 700-799 pounds were 444,000, and 800 pounds and greater were 690,000.”
In Nebraska, placements in feedlots during the month of September totaled 470,000 head, down 16 percent from 2011. Stolle said, “I don’t think that number means a whole lot. What you will see going forward, is we are likely to see placements below year ago levels for the next several months. The 105 on feed number is not really a big news maker. It has more to do with the time of cattle being placed than anything else. It’s more so a timing issue caused by drought.”
The report also shows what the marketing of fed cattle were for the month. “Marketings of fed cattle during September totaled 1.60 million, 12 percent below 2011. This is the second lowest cattle marketings for the month of September since the series began in 1996.
“Other disappearance totaled 64,000 during September, 14 percent below 2011,” the report stated.
Marketings of fed cattle during September in Nebraska totaled 370,000 head, up 6 percent from last year. Other disappearance during September totaled 10,000 head, which is the same as a year ago.
“The marketings are higher because there are more available, and in addition to that, grain costs are high and when you get towards the end of a feeding period animals get less efficient. It makes feeders move cattle more quickly,” stated Stolle.
He continued, “Supplies are going to remain pretty tight from a relative standpoint. I don’t know yet how deep the liquidation really was. This last July, the USDA inventory report was too early to tell us much about the drought, so come January we will have a better idea of the effect the drought had.”
According to USDA forecasts, steers could average $122/cwt for the remainder of this year, and will average $128/cwt next year. As of midday on Thursday, October 22, fed cattle were trading for $126.05/cwt for October contracts, and as high as $136.90/cwt for February 2014 contracts.
“In general, and I think this can be said of the entire cattle industry, due to the tightness of supplies for the next three years and from a big picture standpoint, we are going to see high to very high price levels, but it’s going to be a struggle for those price levels to bring any level of profit to any part of the cattle industry with feed costs as high as they are,” he said.
Cattle feeders across the country are facing high feed costs. USDA reported earlier this month that the corn crop in Nebraska is forecasted at 1.3 billion bushels, which is down 15 percent from last year. Soybeans production is down 22 percent, with a forecast of 203 million bushels.
The USDA also reported that soybean and corn stocks, both off and on farm, were down 17 percent for soybeans and 21 percent for corn. For corn, this is the lowest amount since 1996.
“I don’t think the early placement will have a huge impact from the feed standpoint. Generally the lighter or earlier an animal is placed on feed, the more efficient converters of feed they tend to be. You may have to feed them longer, but they convert more efficiently so the cost of gain standpoint should be about the same,” said Stolle.
Nearly every county in Nebraska is classified under some drought disaster designation, and 95 percent of the state is classified under the two worst drought ratings. Many of the surrounds states including Colorado, Kansas, Wyoming, South Dakota, Iowa and Kansas have more than 50 percent of their area in these two categories as well.
This area represents roughly 30 percent of the area where the nation’s beef cattle call home. Across the country, 62 percent of the U.S. is under drought conditions.
“There is no doubt there has been people who have weaned early to try to reserve their feed resources for the cow herds. There are other operators who usually run yearlings, and they either didn’t this year or cut back on the number. In general, people have made every effort they can to hold on to their cow herds,” said Stolle.
According to the Oct. 22 Nebraska Crops and Weather report, “Pasture and range conditions rated 74 percent very poor, 23 poor, 3 fair, 0 good, and 0 excellent, well below 67 percent good to excellent last year and 66 average.”
Topsoil was rated at 95 percent short or very short, and subsoil was reported at 97 percent short or very short. Last year, these ratings were 35 percent and 34 percent respectively. ❖