Tim Petry
In the Cattle Markets
Tim Petry provides a Northern Plains perspective on the U.S. cattle inventory.
Many areas in the Northern Plains cattle-producing region suffered drought issues during much of the past decade, forcing liquidation of beef cow herds. Although normal moisture conditions returned to most of the Northern Plains in 2009, beef cow liquidation was still higher than the national average.
The USDA cattle inventory report indicated the U.S. beef cow inventory Jan. 1 was down 1.5% from the previous year. But beef cow numbers were reported to be down 2% in Montana, 3% in North Dakota and Wyoming, and 4% in Nebraska with South Dakota declining only slightly. Beef replacement heifers were also down more than the U.S. average of 1.7%. Replacements declined more than 3% in Nebraska and Wyoming, with 8% and 11.7% declines reported in North Dakota and Montana.
There are likely several reasons why additional liquidation in the Northern Plains occurred. Many farms and ranches produce both crops and cattle, and the higher crop prices compared to cattle prices generated more interest in producing crops. A number of producers have relatively small beef cow herds and were at the age when they decided to reduce their workload. The return to more normal precipitation brought a much harsher winter to the Northern Plains in 2008-2009, with some forced liquidation of herds due to blocked roads, inability to access feed supplies, and even collapsed barns. And early spring blizzards and record flooding in some areas caused above normal calf and cow mortality, and cases where cattle feedyards were inundated with floodwater.
In contrast, both the number of feeder cattle outside feedlots and cattle on feed in the Northern Plains were generally above average U.S. levels on Jan. 1. Steers over 500 lb. were up about 6% in North Dakota and Wyoming, and up by almost 12% in South Dakota, compared to a decline of 2% in the U.S.
Heifers over 500 lb. were up 2% in North Dakota, over 10% in South Dakota, and 21% in Montana compared to a less than 1% increase in the U.S.
Cattle-on-feed numbers were about the same as last year in Nebraska, but up 2.6% in South Dakota and up 29% in North Dakota compared to a 1% decline in the U.S.
The increased number of feeder cattle still in the Northern Plains was due to the reduced sales volume that occurred throughout the fall marketing season. Mild weather and good forage conditions resulted in many calves being weaned a month later than last year, when winter set in early and drought in the western part of the region limited forage availability. Cattle operations that graze cows on cornstalks after weaning the calves had to wait to wean because corn harvest was late. By January, only 73% of the corn had been harvested in North Dakota. Ample forage supplies, a large feed barley crop, lots of high-moisture corn and low calf prices encouraged cattle backgrounding and cattle feeding.
With corn prices moderating somewhat, good moisture conditions in the Northern Plains, and a chance for higher cattle prices when the economy improves, there may be interest in retaining more beef heifers in 2010. Replacement-quality heifers are commanding premium prices at many Northern Plains cattle auction markets. For example, several lots of replacement heifers sold for the same prices as their steer counterparts last week, and in a few cases even brought substantial premiums to the steers.
The markets for the week ending Feb. 12
Even though the Choice boxed-beef price remained stagnant at $139.32, down 2¢ from the previous week, fed-cattle prices showed nice improvement. Select boxed beef gained 60¢ for the week so the Choice-Select spread narrowed to $1.87. The five-area liveweight fed-steer price gained $2.74 to $88.41, and the dressed weight price increased $3.51 to $140.18, the highest prices recorded since April 2009.
Feeder-cattle prices also advanced as light receipts due to winter storms were prevalent across much of the country. Cattle that were able to make it to market found strong demand, particularly from areas where the moisture will enhance spring and summer grazing potential. 500- to 600-lb. feeder steers increased over $2 in Nebraska, over $3 in Montana and almost $8 in Oklahoma. The seven- and eight-weight steers increased over $3 in both Nebraska and Oklahoma.
Corn prices in Omaha on Thursday increased 14¢ a bushel for the week, but DGS prices were weaker.
| Table 1: Markets for the week | ||||
Week of 2/12/10 |
Week of 2/05/10 |
Week of 2/13/09 |
||
| 5-Area Fed Steer |
all grades, live weight, $/cwt. | $88.41 |
$85.67 |
$82.20 |
| all, grades, dressed weight, $/cwt. | $140.18 |
$136.67 |
$131.05 |
|
| Boxed Beef | Choice price, 600-900 lb., $/cwt. | $139.32 |
$139.34 |
$136.33 |
| Choice-Select spread, $/cwt. | $1.87 |
$2.49 |
$1.52 |
|
700-800 lb. |
Montana 3-market avg., $/cwt. | $98.86 |
$98.14 |
$94.15 |
| Nebraska 7-market avg., $/cwt. | $103.07 |
$99.77 |
$96.74 |
|
| Oklahoma 8-market avg., $/cwt. | $98.03 |
$94.96 |
$95.66 |
|
500-600 lb. |
Montana 3-market avg., $/cwt. | $122.67 |
$119.07 |
$112.49 |
| Nebraska 7-market avg., $/cwt. | $120.69 |
$118.37 |
$115.84 |
|
| Oklahoma 8-market avg., $/cwt. | $111.31 |
$103.54 |
$108.09 |
|
| Feed Grains | Corn, Omaha, Nebraska, $/bu. (Thurs.) | $3.51 |
$3.37 |
$3.55 |
| DDGS price, Nebraska, $/ton | $105.00 |
$106.30 |
$139.00 |
|
| WDGS price, Nebraska, $/ton | $39.90 |
$40.50 |
$46.75 |
|
| Source: USDA-AMS Market News. | ||||
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