USDA: Historic Drought, Liquidated Herds ... and Fewer August Feedlot Placements?
None of the commodity-on-the-hoof gurus saw this one coming. They had predicted another fat increase in feedlot placements, not unlike July's USDA Cattle On Feed report. Yet here we are, and the Beef Engine of America is in the midst of an historic drought, our forage exhausted, our ranchers culling deep into their herds -- and placements in the big feedlot states were down in August when compared to 2010?
Bear in mind, the number of cattle currently in feedlots is still high -- like, the third-highest number since USDA started tracking those numbers in 1996. Nearly 11 million. In a drought, cattlemen may put their cattle in a feedlot because there's nothing growing on the ground. It's also a common stop on the way to the slaughterhouse for cattle sold at auction. Either way, both translate to more cattle placed in feedlots, which wasn't the case in August.
Unfair Park took our bafflement to the guy who puts the report together: Jason Hardegree, the USDA's cattle-on-feed man. "It's kind of an unprecedented year we've got," he said. "Typically, we've got pretty distinct patterns seasonally, but I think this year's a new ballgame for everybody."
Translated: Let the educated guesswork begin.
Prior to the report's release last Friday, commodities experts spitballed a 107 percent increase over the year before. Instead, the number came in one percent below last year. Why?
Maybe some feedlots are already full after record placements of cattle in need of fattening on their way to the slaughterhouse, he says. Could be that ranchers have culled as deep as they want to for now. Either way, the cyclical nature of the beef industry has been upended.
"Our largest placements typically come in the fall," Hardegree says. "It could be some have already been moved that would have been grazing throughout the summer."
It could be that all the skinny, drought-stressed cows are taking up all the space and taking longer to fatten -- this at a time when ethanol production has driven up the price of feed corn. Also worth nothing that in August Texas placed on feed some 150,000 more cattle weighing under 600 pounds than we did last year.
Feedlots in Texas, on the other hand, are stocked 15 percent above last year.