September cattle on feed smallest in a decade

Farm Forum

BROOKINGS – USDA reported that there were 9.876 million head of cattle on feed in feedyards with 1,000-plus head capacities on Sept. 1, 2013. That’s down 7.2 percent from a year ago and is the smallest September on feed inventory since 2003, said Darrell Mark, Adjunct Professor of Economics at South Dakota State University.

“In fact, it is the smallest for any month since August 2009. As feeder cattle supplies have declined over the last several years due to liquidation of the beef cow herd, the number of cattle on feed has decreased year-over-year for the past thirteen consecutive months,” Mark said.

August fed cattle marketings totaled 1.883 million head, which Mark said is nearly 4 percent below August 2012.

“Average daily marketings for the month of August, however, were on pace with a year ago due to August 2013 having one less business day than August 2012,” said Mark.

According to Mark, marketings as a percentage of cattle on feed were 18.8 percent last month. He noted that is the second consecutive month that this metric for the pace of marketings has exceeded year-ago levels, reflecting the heavier placement weights (and therefore fewer days on feed) that have become the norm in the last several months.

There were only 3 million head of cattle on feed for more than 120 days as of September 1, 2013 – the smallest in three years for the month of September – which again reflects shorter feeding periods.

Cattle feeders placed 1.788 million head of cattle on feed during August, which he said is almost 11 percent less than a year ago.

“In fact, it is the smallest placements for August since the current data series began in 1996. Amongst the high plains cattle feeding states, Nebraska saw the smallest year-over-year drop in placements (6 percent), possibly due to cattle feeders’ expectations for a large corn crop to be harvested in that state this fall,” he said.

Cattle feeders continued to place proportionally more heavy feeder cattle on feed last month compared to lighter weight calves – albeit, Mark said, not to the extent they did earlier in the summer when corn prices were higher.

During August, placements weighing less than 600 pound were down 16 percent from a year ago. Placements weighing 600-699 pounds were 12.2 percent smaller than last year. Placements weighing 700-799 pounds and 800-plus pounds were were 9.5 percent and 7.4 percent less than a year ago.

The average placement weight of feeder cattle in August 2013 was about 5 pounds heavier than in August 2012. Average placement weights typically decline through the fall as calf-feds are placed on feed after weaning.

Mark explained that during the last five years, average placement weights decreased almost 50 pounds from September through November, before starting to seasonally increase again in December.

“This year, average placement weights could decline even more as cattle feeders put more calf-feds in the feedyard this fall,” Mark said. “Not only will overall tight feeder cattle supplies prompt cattle feeders to place lighter cattle, but much lower corn prices make it more economically feasible.”

During the past month Mark said projections for winter calf-fed programs resulted in positive profit margins in the $100-200 per head range.

“Granted, those margins will be highly dependent on corn and other feedstuff prices, but it is a marked improvement over the last several years,” he said.

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