Impact of cattle on feed report contains a few surprises

Prepared and written by Jeff Swenson, DATCP Livestock and Meat Specialist. The Market Update draws information from several sources, including trade publications, radio broadcasts, agricultural news services, individuals involved in the industry as well as USDA NASS and AMS reports.

Friday, Sept. 25, 2021 saw the release of a USDA Cattle on Feed Report. The on-feed and marketing numbers were close to pre-report estimates, but the surprise came in the placement total at 2.3 percent above August of 2020. Futures markets took that number as bearish and worked lower early in the week.

The total cattle on feed on Sept. 1, 2021 of 11.2 million head is about 1 percent lower than a year ago. However, it is still the second highest inventory since the report began in 1996. 

The weights of cattle placed does not suggest cattle moving into feedlots early due to drought, but it would be hard to argue that dry conditions in cattle country haven’t impacted placements.

Beef cow harvest in August was 46,000 head higher than the same month in 2020. In the near term, cattle supplies are tightening, but recent weekly cattle harvest totals have made it a challenge to keep feedlots current. Last week’s total of 641,000 head was 16,000 head lower than the previous week and 14,000 head below the same week last year.

Total beef production in August was 2.36 billion pounds, 1 percent above last year. Total cattle harvest by head was 3 percent higher than 2020. Dressed weights were 1.8 percent below August last year.

Beef cutouts lost $11.25 last week, although they are still $92.00 higher than this time a year ago. Beef cow harvest in August in was 46,000 head higher than the same month in 2020.

Report sends shockwaves through hog industry

The latest USDA Quarterly Hogs and Pigs Report, released Sept. 24, 2021, sent shockwaves through the pork complex. The breeding herd is estimated to be 6.19 million head, 2 percent below last year. Market hog inventory was 4 percent lower than the same time last year and up 1 percent from last quarter. The June through August pig crop was 6 percent lower than last year.

We typically see a small increase in the breeding herd this time of year, so 2021 is bucking that seasonal trend. Lean hog futures contracts reacted by closing limit up Monday and have been working higher through mid-week. Cash hogs, however, have been lower and the carcass cutout is showing weakness.

Packers turned in strong weekly harvest numbers, estimated at 2.578 million head last week. That is 41,000 head higher than a year ago and 28,000 lower than the same week last year. Pork production was 5.4 percent lower in August compared to last year with harvest 4.5 percent lower than 2020.

The shadow of African Swine Fever has clouded optimism, but domestic and foreign demand for U.S. pork remains strong. This week’s rally in the futures may give producers an opportunity to take advantage of the higher contract prices.

Tight lamb supplies continue

Lamb and mutton production was 10.3 million pounds, down 6 percent from August 2020. Sheep harvest totaled 176,400 head, 1 percent below last year. The average live weight was 116 pounds, down 7 pounds from August a year ago.

The tight lamb supplies and trend toward lighter lambs pushed production totals to a record low for the month of August. Veal production also posted record lows. While harvest totals were 34,800 head higher than the same month last year, the average live weight was lower by 38 pounds per head.

State auction market trends

Choice beef breed steers and heifers at Wisconsin and surrounding state auction markets were steady to lower. High-yielding, high-grading cattle brought $108.00 to $124.00/cwt with highs to $125.00/cwt. Choice and Prime Holstein steers were mixed bringing $91.00 to $114.00/cwt. There were some packages of Holstein steers selling into the lower $120.00s/cwt. Silage fed, under finished, or heavy dairy breed steers brought $70.00 to $91.00/cwt. Dairy x beef steers were mostly $90.00 to $119.00/cwt. Cows were sharply lower, bringing $39.00 to $59.00/cwt. However, blemish free cows in fleshier condition were still selling to the upper $70.00s/cwt. Doubtful health and thin cows were bringing $39.00/cwt and down. Dairy breed bull calves were steady at $40.00 to $90.00/cwt with heavier, well cared for calves up to $165.00/cwt.  Beef and beef cross calves brought up to $310.00/cwt. Market lambs sold to $250.00/cwt.