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Cattle prices resilient as feedlots defy gravity again

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Prices supported by faster pace of slaughter, lighter weights and relatively stable boxed-beef prices.

Aided and abetted by the drought, feedlots put together another month of large placements in July, according to Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel.

USDA’s July “Cattle on Feed” report showed placements were 101.8% of last year, despite growing indications that feeder supplies are declining. July 1 estimated feeder supplies outside of feedlots were down 2.7% year over year. 

“Drought continues to force cattle to market sooner than planned,” Peel noted. “Oklahoma auction volumes of feeder cattle for the past six weeks are up 10.9%, consistent with the unexpectedly large placements in July.”

July feedlot placements included a 2.5% decrease in feeders weighing over 700 pounds, which was more than offset by a 9.5% increase in feeders weighting less than 700 pounds. Peel noted that this is the third month in a row with increased placements of lightweight feeders and decreased placement of heavy feeders. 

Total feedlot placements in May – July were down 1.0%, with placements under 700 pounds up 6.0% and placements over 700 pounds down 4.7%. 

Peel relayed that feedlot placements over the past six months—since February—have totaled 10.91 million head, up 0.8% year over year. This accounts for 97.2% of the 11.224 million head on-feed inventory on August 1.

In those six months, placements weighing under 700 pounds are up 3.5% year over year, while placements over 700 pounds are down 0.7%. 

“All of this suggests that feedlots are somewhat back-loaded with relatively tighter numbers finishing in the August – October period and recent lightweight placements finishing November and later.”

The implications for feeder cattle markets may be even more important, Peel added. “Increased lightweight placements, especially since May, likely includes fall calves marketed right off the cow, early weaned spring calves and summer stockers marketed ahead of schedule.”

Pasture and range conditions are currently rated at 52% poor/very poor, the worst level for this time of year since 2012. Consequently, Peel said it appears calves and feeder cattle available this fall will likely be significantly smaller because many cattle have already moved to market.  

Cattle prices exhibit resilience

The price for feeder steers 750-800 pounds at the Oklahoma City National Stockyards averaged $169.26 per hundredweight (cwt.) in July, up more than $16.00 from last year, according to USDA’s latest “Livestock, Dairy, and Poultry Outlook.” The most recent available price from Aug. 8 put feeder steers at $178.56/cwt., a jump of more than $9.00 from the prior week.

Based on anticipated firm feedlot demand in second-half 2022 and current price data, USDA raised its third and fourth-quarter 2022 price forecasts by $3.00 to $171.00/cwt. and $2.00 to $173.00/cwt., respectively. The outlook for feeder steer prices in 2023 remains unchanged at $199.00/cwt.

Weekly fed steer prices have trended upward throughout the year but have traded in a narrow range when compared to typical seasonal movements, USDA noted. Although weekly prices had retreated more than $5.00 by the end of July from the year-to-date high set the week ending July 3, USDA expects prices will continue the overall trend upward through rest of the year. The fed steer price for the 5-area marketing region for the week ending August 14 was $144.39/cwt., more than $21.00 above a year ago.

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“Fed cattle prices have been supported by a generally faster pace of slaughter than last year, lighter weights, and relatively stable boxed-beef prices,” USDA said.

Based on current price data, USDA forecasts third- and fourth-quarter 2022 fed steer prices at $140 and $147/cwt., respectively. The 2023 fed steer price is up slightly from last month at $154.00/cwt.

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