Cattle on Feed and Slow Herd Expansion
The April 1 inventory of feedlots over 1,000 head capacity was 11.729 million head, up 7.4 percent from last year. This report was very close to pre-report estimates and contained no surprises. Feedlot marketings in March were 96.1 percent of last year, just about even with last year considering that there was one less March business day in 2018 compared to one year ago. March placements were 90.7 percent of last year. While close to expectations, this placement number is significant because it breaks a string of twelve consecutive months of year over year placement increases.
Decreased March placements are not an indication of fewer total cattle supplies but rather are a confirmation of the change in feedlot timing in recent months. Larger, drought-enhanced placements in recent months have built up feedlot inventories and have set the stage for larger than normal seasonal peak marketings in May and June. Lower March placements are a reminder that, while the timing of feedlot production has changed somewhat with cattle entering the feedlot earlier than usual recently, fewer cattle are now available for placement and the overall number of cattle is unchanged.
The April 1 quarterly breakdown shows that the number of steers on feed was 4.1 percent higher year over year, similar to the 4.4 percent increase on January 1. Heifer feedlot inventories were up 14.0 percent compared to one year ago. Heifers on feed began to increase sharply in mid-2017 with higher quarterly inventories July 1 (+10.6 percent) and October 1 (+13.0 percent) as well as January 1, 2018 (+16.0 percent) and now April. The increase in heifers in feedlots is indicative of the slowdown in heifer retention in 2017 and continuing in 2018.
The heifer slaughter that follows from increased heifers in feedlots provides an indication of the status of herd expansion in 2018. In the past twelve months, heifers have represented an average of 34.3 percent of total steer and heifer slaughter. Over the course of a cattle cycle, heifers account for about 37 percent of total yearling slaughter, a level that generally represents a stable herd size. This percentage varies from roughly 31 percent during rapid herd expansion to about 40 percent during herd liquidation. The current level of heifer slaughter is up from a recent low of 31.4 percent in mid-2016 but is still less than the long term average and certainly below levels that would suggest herd liquidation. Heifer slaughter is increasing but is still at a level that suggests limited but slightly positive herd growth.
The other component of herd inventory change is cow slaughter. Beef cow slaughter for the year to date is up 10.6 percent year over year. At the current pace, beef cow culling in 2018 would continue to climb from the low levels of recent years (record low in 2015) and return to normal levels this year. Both heifer slaughter and beef cow slaughter patterns thus far are consistent with the idea of positive but small continued beef cow herd expansion in 2018.
