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 dissects the USDA's latest Cattle on Feed report and the various market dynamics factoring into it and how they might affect it over the next few weeks and months.
"The March Cattle on Feed report brings the feedlot data up to date and back on schedule following the federal government shutdown. February feedlot placements were 102.2 percent of last year. This was significantly larger than expected with year over year increases in placements of cattle weighing 800-900 pounds and cattle weighing less than 700 pounds. The February placement total is the largest for the month since 2000. Feedlot marketings in February were 100.5 percent of one year ago, close to pre-report expectations.
"The March 1 feedlot inventory was 11.796 million head, 100.7 percent of one year ago and the largest March on-feed inventory since 2008. Over the last twelve months, the average feedlot inventory was 11.529 million head, the largest twelve month moving average since January 2000. The twelve month moving average reached a recent low of 10.375 million head in October 2014 and has increased most months since then. For the last twelve months, feedlot inventories have averaged 11.1 percent higher than the annual average of the October 2014 low.
"Although the data are mostly caught up, March weather combined with previous winter conditions continues to create uncertainty about cattle market conditions. The long cold winter has been characterized by persistent and deep snow in some places and wet, sloppy conditions in others. Now floods are devastating large regions along the Mississippi and Missouri river basins with additional flooding expected. The impacts on crop and livestock markets are likely to be felt for many weeks and months to come.
"On the crop side, losses of stored grain, hay and other products will have immediate impacts on the producers affected and perhaps on broader markets. Disruptions to transportation may be the biggest impact with truck, rail and river transportation all impacted by the floods and associated damage and likely to be affected for weeks ahead.
"Cattle and beef markets are currently impacted with lower fed cattle weights, lost performance and, no doubt, increased animal morbidity and mortality. The timing of the floods are particularly insidious given that it is calving season for many cow-calf operations. This is likely to result in cattle losses even greater than would be expected during floods. It will take many weeks to fully assess the cattle losses due to winter weather and the floods.
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