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Daily Livestock Report: Feeding segment structure affects price trends in cattle

by Wyoming Livestock Roundup

USDA’s National Agricultural Statistics Service released their Cattle on Feed report on Feb. 28, which showed near-records for January placements.

CattleFax reported on March 1 that cattle on feed numbers were the second largest from the past 10 years, with placements up 202,000 head, or 11 percent, from January 2016.

“Over the past three months of data, which compared year-over-year, placements are now up 711,000 head, which is five percent above the five-year average,” said CattleFax. “Placements have been boosted by a positive swap and spring and early summer break-evens that suggest manageable profits.”

They added, “Also, a faster turnover rate has created more vacancies in the feedyard.”

In the past three months, the number of cattle on feed for over 120 days dropped to below 3 million head for the first time since late 2014, and CattleFax commented, “On a percent scale, year-over-year declines have been in the double digits, meaning cattle on feed for over 120 days have averaged down 13.1 percent since December.”

Industry update

At the end of February’s Cattle on Feed report, the agency provides an update on the feeding capacity and inventory of cattle by operator size.

The most recent report contained few surprises, according to the March 1 Daily Livestock Report (DLR), a daily summary of livestock markets published by Steiner Consulting Group.

“It also served to show that while the smaller feedlots marketed a few more cattle than the previous year, their overall impact still remains quite small and likely not sufficient to have a significant market impact,” DLR said.

The majority of feeding operations across the U.S. tend to be small or very small, and the latest surveys show that 93 percent of 2016’s 30,219 feedlots had capacity of fewer than 1,000 head.

“Indeed, many of these operations often consist of dozens, rather than hundreds, of animals,” DLR continued. “We will have to wait for the 2017 Census of Agriculture to get a better picture of how the various feeding operations are distributed by state.”

Market share

DLR also noted that, while most feedlots in operation tend to be very small, they also account for a relatively small share of overall inventory and marketings.

“On Jan. 1, operations that had a capacity of less than 1,000 head of cattle had an on-feed inventory of 2.462 million head, 4.6 percent less than the previous year,” DLR commented. “This inventory represented about 18.8 percent of the 13.067 million head inventory on feed in all operations on Jan. 1.”

The majority of cattle on feed can be found in very large feedlots, operating at a capacity of 50,000 head or more.

“The survey indicated that there were 73 such feedlots in 2016, and on Jan. 1, 2017, they had a combined on-feed inventory of 4.260 million cattle, 4.1 percent more than the previous year,” DLR said.

They continued, “So, while a year ago it was the smaller feedlots that showed a new increase in on-feed numbers, it is now the large and very large lots that have gained ground.”

The figures make sense, according to DLR analysts, because feeding margins degraded significantly during 2016, meaning large feedlots were more able to withstand the financial pressures than their smaller counterparts.

Small feedlots

DLR continued that small feedlots marketed more cattle in 2016, however, because they had a larger inventory on Jan. 1, 2016. Total marketings by small feedlots in 2016 were 3.1 million head, a seven percent and 205,000-head increase over 2015.

“It is possible that during certain times of the eyar – fall maybe – the increase in marketings from the maller operations was quite a bit larger than normal,” DLR commented. “However, the reality is that, in the big picture, those marketings of cattle from small feedlots as a percentage of marketings in recent years have been quite stable.”

Feed prices

DLR also pointed out what they called an obvious trend, noting that the number of small feedlot marketings declined following rapid increases in feed prices.

“Even with corn back in the $3.50 range, we have yet to see a recovery in the marketings from small operators,” they explained. “We expect the impact of marketings from smaller feedlots will be smaller in 2017, given the lower on-feed inventory Jan. 1, 2017.”

At the same time, large operators continue to consolidate and expand, with 50,000-head-plus feedlots accounting for 32 percent of the cattle on feed today, compared with only 24 percent in 2007.

Saige Albert is managing editor of the Wyoming Livestock Roundup. Send comments on this article to

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