TWIN FALLS • Improved Midwestern pastures and the potential for sharply lower corn prices means yearling cattle are in demand.
Last year’s drought meant that many Midwestern cattle producers marketed calves early last year and filled feedlots earlier than usual. As widely expected, the U.S. Department of Agriculture’s July cattle-on-feed report showed the nation’s feedlot inventory was 3 percent below last year at 10.4 million head.
Idaho’s feedlot inventory totaled 195,000 head, down 2 percent from the previous year. Oklahoma was down 5 percent, while Texas, Nebraska and Iowa were all 4 percent lower. The report was considered neutral to slightly friendly to the cattle market. That was reflected by a nearly $3 per hundredweight increase in the nearby feeder cattle futures contract.
Although feedlots are still losing close to $200 per head resulting from high feed costs over the winter, lower feed costs mean the average feeding loss is shrinking. With the prospect of a bountiful corn crop, many farmer-feeders in Iowa and Nebraska are trying to buy green cattle to fill their lots.
USDA’s latest corn production estimate, released last week, pegs the 2013 crop at just below 14 billion bushels. If that production is realized, it will be 858 million bushels above the record in 2009/2010.
USDA forecasters are projecting a national season’s average farm price for corn of $4.40 to $5.20 per bushel. Last July, the national average price was projected at $5.40 to $6.40 per bushel as the depth of the drought was just becoming known.
With the prospects of cheaper corn looking better every day, yearling demand continues to be strong. The yearling market was sharply higher in early July and continues to be strong with yearling prices firm to $7 per hundredweight higher throughout the Northern Plains and upper Midwest.
Auctions in Bassett and Valentine, Neb., this week illustrate the point. Nearly 1,300 head of top quality 900- to 950-pound steers, which averaged 918 pounds, sold for $147.48 per hundredweight. At that price, many feeders may be thinking that high of a price just won’t pencil out. However, market watchers say that farmer-feeders who will put their own corn through the cattle and can put enough pounds on them, should put them in a hedging position that will be profitable, analysts say.
Nebraska is now the number two beef cow state behind Texas. When faced with tight feed supplies, Nebraska producers chose to put up more hay to keep their cows rather than background calves last year. That has made yearling calves a scarce commodity in the Cornhusker State and is helping push up prices.
Feeder cattle prices in Idaho, Oregon and Washington were also up $4 to $7 per hundredweight last week. Feedlots are short of inventory and demand was classified as “very good.” Steers weighing 875 to 900 pounds brought $134 to $142 per hundredweight, with 800- to 900-pound heifers bringing $129 to $134 per hundredweight.