The feeding sector of the cattle industry has seen a lot of adjustments in response to the coronavirus outbreak. David Anderson, professor and Extension ag economist with Texas A&M University, says those adjustments are ongoing.
“The cattle feeding part of the industry has been in the midst of dramatic adjustments over the last couple of months, just like the rest of the industry,” he said in his In the Cattle Markets column.
The most recent Cattle on Feed report shows the situation trending back more toward what is expected.
“USDA released its June Cattle on Feed report on Friday, June 19 and it showed some more adjustments, but this time back in the direction of normal,” Anderson says.
Placements appear to be stabilizing after months of big declines.
“After two months of 20% or more year-over-year declines in placements, May placements were down about 1.3% from the year before,” Anderson said. “May is typically a larger month for placements due to cattle coming off wheat pasture and other small winter grains.”
The cattle inventory situation heading into the virus outbreak also helped shape the response and how much flexibility the industry has.
“It’s worth remembering the USDA’s Cattle inventory report in January indicated 290,000 fewer cattle on small grain pastures this year, compared to last year,” Anderson says. “Fewer wheat pasture cattle likely contributed to the ability to adjust.”
Feeder cattle sales have also started to bounce back, he says.
Anderson says placement weight trends also show how the industry has been responding to the situation.
“Placement weights are also part of continued adjustments,” he says. “Slightly more placements, 5,000 head, were reported in the lightest, under 600 pound category. Placements were up 31%
in Colorado, and were higher in every weight category. The increase in Kansas placements were in the over 700 pound categories.”
The work of getting back to normal continues.
“While the report indicated some getting back to normal, there remains a backlog of cattle due to the packing logjam,” Anderson says. “The calculated number of cattle on feed longer than 120 days is 5.1 million compared to 4.2 million a year ago… So, there remains more adjustments to come to work through the impacts of coronavirus in the cattle markets.”