Cattle on feed, friend or foe?
The most recent Cattle on Feed report showed 8% fewer cattle than Oct. 1, 2012. There is fundamental support for fed cattle prices staying high or maybe even going higher in the future.
Now, if you are a meat buyer, those numbers certainly haven’t been “friendly” for a while. Tight supplies raise questions as to how high retail prices will need to go, and even whether product will be available to fill all orders.
Looking at the cattle on feed total doesn’t tell the whole story. It’s almost as important to look at the weight of those cattle and when they’ll be headed to market. Shawn Walter at Professional Cattle Consultants (PCC) provided this great breakdown of the weights of cattle on feed:
That graphic is pretty amazing to me. Compared to the report from last year, the industry has a lot more heavy cattle in the feedlot. In fact, 28% of the steers on feed are over 1200 lb. versus 17% at this time last year. That suggests near term we will have a decent supply of market-ready cattle, but that will change drastically when we get past Christmas.
What’s good for you might instill fear in the folks we have selling our beef every day. At CAB we work to get our licensees the most reliable predictions on CAB® supply. While fed cattle numbers will be lower, CAB® brand supplies will likely not see the same level of reduction for two reasons:
- We predict the trend toward more Angus-type cattle in the mix will continue. That means more of the fed cattle meet the first hurdle to be considered for the brand.
- Additionally, with the improvement we’ve made in genetics and management over the years, we continue to see a higher percentage of those Angus-type cattle meeting the brand’s 10 carcass specifications.
The CAB supply has been insulated to a degree because of the trend in black hides and grading improvement. Fortunately for our buyers, CAB is available at every major packer in the U.S. and Canada. That’s especially a boon in times of tighter supplies.
All supply metrics seem to point to historically high cattle price levels for the foreseeable future. The market is trying to work and send a strong signal for some herd rebuilding. If Mother Nature cooperates, I sure think that will happen.
And that’s where the opportunity lies. What kind of herd will you build back?
Mark
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