As more government reports are released in the wake of the shutdown earlier this year, the impact of a brutal winter is being seen in the data.
Stephen Koontz, an ag economist with Colorado State University, says cattle on feed inventories remain high, running nearly 50,000 head higher in the seven major feeding states compared to a year ago and 97,000 head higher than the five-year average.
Koontz adds the inventory of cattle that have been on-feed for 120 days or more is also much higher than it was a year ago.
“There are a lot of cattle to be marketed through the end of March and into April and May,” Koontz writes in his In The Cattle Markets report. “Slaughter volumes reported in the weekly Livestock Slaughter report do not communicate that this is happening. Total cattle slaughter is up modestly.”
He says cow and heifer slaughter numbers vary from week to week, while fed steer slaughter is even or slightly less than a year ago.
“April marketings will be an important indicator of the potential strength of the cattle markets through the summer,” Koontz says. “Weak marketings will suggest a backlog of animals.”
Slaughter reports also show lower carcass weights, he says.
“Fed steer weights for 2019 are all lower than the same week in 2018,” Koontz says. “Carcass weights are 1 to 13 pounds lighter each week of this year. Fed heifers, which are a larger portion of the slaughter mix this year, are almost always more than 10 pounds lighter than the week of the prior year.
“Clearly, the cold wet winter has slowed marketings, extended days on feed, decreased feed conversion, held down slaughter weights and increased costs of gain.”
Koontz says data from Kansas State University, among other sources, shows cost of gain is running 5 to 7 cents per pound higher than a year ago as cattle coped with cold weather and snow. He says more cattle are coming down the line, but weights are lighter.
“Winter weather and general conditions appeared to slow the feeder cattle market down through the end of last year and early this year,” Koontz says.
“In January and February, I worked cattle feeding budgets with fall fed cattle futures, spring feeder cattle futures — both basis-adjusted, and with reasonable projected spring and summer cost of gains.
“There were close to $100 per head profits that could be hedged in this window for heavier calves. Needless to say, feeder cattle prices have improved since then.”