Cold weather sweeping through a portion of the nation's feedlot industry could be playing an even bigger role on live cattle weights than the price of corn, a Texas Cooperative Extension economist said.
Even though corn prices have increased due to growing ethanol production, Texas-Oklahoma steer and heifer live weights have declined more than 2 percent from a year ago, said David Anderson, Extension livestock marketing economist.
“The weight data would suggest the declines are actually due to weather and not to higher feed prices,” he said, noting 2006 feedlot-finished weights were close to 2005 levels, with weekly changes less than 1 percent.
Corn price swings due to ethanol demand is putting a squeeze on the profitability of feedlot operations. With already lighter weight cattle coming into feedlots, operators are faced with feeding more expensive corn to add more gain.
Drought conditions throughout Texas last year yielded lighter-weight cattle, Anderson said.
“The rule of thumb that ‘the lighter they go in, the lighter they come out’ is also an issue affecting weights,” he said.
Ranchers were forced to send lightweight calves to market because of poor pasture conditions. Lack of rainfall and scorching temperatures in 2006 sent large numbers of calves to sale barns earlier than usual.
During the 1992-1993 winter, similar cold weather systems blew through the Plains cattle feeding industry. Those severe winter conditions led to weight loss, sickness and increased death loss, Anderson said.
“During that winter and spring, cattle weights were lower than in the same week the year before for 34 consecutive weeks,” Anderson said. “Weight declines exceeded 3 percent some weeks.”
Meanwhile, the recent U.S. Department of Agriculture Cattle Inventory Report indicated total cattle inventory increased 301,000 head from Jan. 1, 2006. That's only three-tenths of a 1 percent increase, indicating cattle herd expansion “is continuing in this cycle, albeit slowly,” Anderson said.
“But the really interesting part was in the beef cow herd,” he said. “While the total inventory was up, beef cow numbers were down 100,000 head. That also amounted to a small, three-tenths of 1 percent decline, but it confirmed the impact of the drought on the Southern Plains cow herd.”
Beef cow replacements were also down significantly, he said. Texas beef cow numbers dropped 152,000 head or 3 percent from a year ago, while Oklahoma saw a decline of 75,000 head (4 percent). Missouri, Montana, Kansas and South Dakota saw a combined 3 percent decrease in beef cows.
However, Kentucky (8 percent), Colorado (7 percent) and New York (34,000 head) all saw increases in beef cow numbers.
“So where are we headed?” Anderson asked. “While the total inventory was up slightly — indicating a continued cattle cycle headed higher in inventory — that was influenced by the large number of cattle on feed. The productive part of the cow herd, the cows and replacements, was smaller than a year ago.
“We can attribute that to the drought that affected the two largest cow states — Texas and Oklahoma. Those two states alone reduced cow numbers by 227,000 head.”
Calf prices should remain historically high in 2007, Anderson said, but around late 2006 levels, with the higher corn prices figured in.
“What drought has taken away, rains may bring back,” he said. “With calf prices at these levels, good pasture and range conditions may restart herd expansion in the drought-affected states. All told, this would suggest a very slow expansion beginning again when pasture and range conditions are accessed by producers.”
Consumers may notice few changes at the retail meat counter, Anderson said. “While cattle weights are lower, beef production is expected to be a little larger than a year ago, leaving prices about the same to the consumer.”
Cattle cycle facts
Even though corn prices have increased because of growing ethanol production, Texas and Oklahoma steer and heifer average live weights have declined more than 1 percent from 2006.
Severe cold weather affects feed consumption of feedlot cattle, can lead to sickness and, in some cases, death loss.
Drought conditions in Texas and parts of the Midwest last year attributed to the lighter weights.
Higher corn prices may be forcing some feedlots to send cattle to slaughter sooner as a result of expensive feed.
The recent U.S. Department of Agriculture Cattle Inventory Report indicates total cattle inventory increased 301,000 head from Jan. 1, 2006.