What is in this article?:
- Feedlot prospects worrisome for U.S. cattle industry
- Different business environment
- Dramatic change
- Feedlots face different business environment.
- Drought has contributed to feedlots’ difficult circumstances.
- Feedlots are paying record prices for feed and essentially record prices for feeder cattle.
CATTLE BEING PROCESSED through feedlots are dollars on the hoof to the economies of many Great Plains states.
Different business environment
“It is likely that corn prices in the future will average at least twice the level under which the feedlot industry we know today evolved,” Anderson said. “The point is that even without the drought, feedlots face a significantly different business environment.”
Forty years of cheap corn had many structural implications on the beef industry, most of which were manifest through the feedlot sector. Many of the changes in cattle genetics and preference for animal size and type were largely a function of feedlot-driven demand, which was in turn based on inexpensive corn.
“More than anything else, feedlots have become a calf-feeding industry where an ever-higher percentage of the total cattle weight, and thus beef production, has been based on grains,” Anderson said.
As cattle numbers peaked in the 1970s and then began to fall, feedlots maintained inventories by feeding lighter and younger animals for longer periods of time. In the decade of the 1970s, the average January 1 feedlot inventory was 13 million head, with an average all-cattle inventory of 120.4 million head and an average estimated feeder supply of 42.1 million head.
“Feedlot inventories represented slightly less than 11 percent of total cattle numbers and 31 percent of feeder supply,” Peel said. “This last figure means that there were approximately three feeder cattle available to replace every animal already on feed at the beginning of the year.”