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Heavier placements in areas impacted by drought

Heavier placements in areas impacted by drought

Cattle hogs split screen

Last week’s USDA Cattle on Feed report caught most analysts by surprise, with placements up 0.7% from a year ago at 1.842 million head.

The heavier placements came in areas impacted by drought, according to an analysis from the Livestock Marketing Information Center. Colorado saw a large increase, while Iowa, Nebraska, Kansas and a handful of other states saw a sizable jump in placement numbers.

Placements in Texas, however, were down 30,000 head.

“Overall, the dryness in the West likely played a role in moving animals on feed,” the LMIC said in its analysis. “Hay supplies are tighter and the whole feed complex has moved up significantly.”

According to the USDA, the report showed it was primarily larger animals that were moved. Weights over 700 pounds showed higher placements, with the 900-999 pound category seeing a 16% gain from a year ago.

The LMIC estimates feedlot break-evens for December around $109 in the Southern Plains.

“There have been opportunities to lock in profits, but January placements may look different,” the center said. “Feed costs have escalated significantly since December. In the last week, boxed beef cutout values have climbed as well on better demand, which has helped support cattle prices. If these prices hold, they will offset the higher feed costs and help stabilize cattle feeding margins.”

Pork cutout values have run higher over the first three weeks of 2021, up nearly $1.50. Much of that increase can be attributed to jumps in belly, ham and rib primals, according to the LMIC.

“The pork cutout value starting the year off stronger has helped bolster the live to cutout spread with the first three weeks averaging near $50 per head,” the center said in its analysis. “The five-year average live to cutout spread has been about $45 per head.

“The strong pork cutout value has helped buoy the live to cutout spread, but another contributing factor is due to pork by-product values, which have been holding near an average of $4.40 per cwt for several weeks.”

The LMIC says the base slaughter hog price nationally rose nearly 4.2% the first week of January and was up another 2.1% the following week.

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Jeff DeYoung is livestock editor for Iowa Farmer Today, Missouri Farmer Today and Illinois Farmer Today.

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