Dr. Derrell Peel, Oklahoma State University Extension Livestock Marketing Specialist, offers his economic analysis of the beef cattle industry. This analysis is a part of the weekly series known as the "Cow Calf Corner" published electronically by Dr. Peel and Dr. Glenn Selk. Today, Dr. Peel writes about the latest USDA Cattle on Feed Report that was released last Friday ahead of the long Memorial Holiday weekend.
"Stronger than expected April placements pushed the May 1 feedlot inventories to 102 percent of year ago levels. April placements were 111 percent of last year, above the average trade guess though not outside the range of expectations. April marketings were 102.7 percent of last year, also above expectations and a continuation of strong feedlot marketings.
"Slowly growing feedlot inventories reflect the increase in feeder supplies resulting from three years of herd expansion. The May 1 on-feed inventory is the highest monthly cattle on feed total since February of 2013 and the highest May total since 2012. A combination of short and long-run regional factors and trends has resulted in some interesting comparisons of cattle feeding in the major feedlot states. The data comparisons below are based on the current cattle on feed data series that dates back to 1992.
"Texas has been the largest cattle feeding state since the early 1970s, but has trended down in recent years. Texas feedlot inventories have not grown very fast in recent months with the May 1 inventory of 2.46 million head unchanged from last month and 1.2 percent lower than last year. In fact, the current inventory is only 2.1 percent above the recent low of 2.41 million head in May, 2015, a low that goes back to 1997. Current Texas feedlot numbers are 20.1 percent lower than the all-time monthly inventory peak of 3.08 million head in February/March of 2001 and 18 percent lower than the more recent peak of 3.0 million head on-feed in November 2011.
"The number two cattle feeding state, Nebraska has average much closer to Texas in recent years with the decline in Texas numbers. Nebraska monthly on-feed inventories have equaled or exceeded the Texas total several months in recent years and have averaged about 170,000 head less than Texas compared to previous years when Nebraska typically had about 700,000 head less cattle on feed than Texas on a monthly basis. Nebraska’s current inventory of 2.45 million head is up 1.2 percent year over year but, like Texas, has grown relatively slowly in recent months. The current monthly total is just 10,000 head smaller than the Texas total. The current Nebraska feedlot inventory is 4.7 percent below the peak Nebraska monthly inventory of 2.57 million head in February/March 2012.
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