August 13, 2017

Cattle on Feed Inventory Remains Higher Than a Year Ago

USDA released its August Cattle on Feed report on August 25, along with the monthly Livestock Slaughter report. The two reports provide some updated information to use in projecting future cattle and beef supplies. The Cattle on Feed report confirmed that the on-feed inventory continues to be larger than a year ago, as the August inventory was 1.5 percent larger on August 1, 2016. Marketings of cattle from feedlots with capacity of over 1,000 head increased 2 percent in July versus a year earlier, while net placements (placements minus other disappearance) changed little (up less than 1 percent) compared to July 2016. This was a big shift in the placement pattern compared to the March-through-June timeframe when net placements increased by 12 to as much as 17 percent (in June) compared to the same month in 2016. Placements on feed during July typically fall below well below June’s, but the decline this year was larger than usual. Finally, by at least one measure, cattle feeders appeared to slow down the pace of fed cattle marketings as fed cattle marketings expressed as a percentage of the on-feed inventory fell below a year earlier in July. July marked the first month in 2017 that marketings as a percentage of the on-feed inventory dropped below the year ago level.

Cattle slaughter continued to run well above a year earlier during July, with daily commercial slaughter averaging 5.5 percent above the prior year. So far, this year’s daily slaughter volume has averaged 6.4 percent above last year, which is a bigger increase than the trade was expecting at the outset of the year. Commercial beef production during the first seven months of 2017 totaled 4.7 percent above the same period in 2016 as weights averaged below a year ago. For example, carcass weights during July averaged 1.3 percent below a year earlier, which helped hold the year-to-year increase in beef production down to 4.1 percent. Although dressed weights during July were lower than last year, the percentage decline was the smallest since February. Seasonally, weights tend to bottom out in May and then increase until mid-fall. That pattern appears to be holding true this year as carcass weights during July were 21 pounds heavier than in May, when weights bottomed out.

One way to monitor whether U.S. producers are expanding or contracting their herds is to examine female (cow and heifer) slaughter relative to steer slaughter. When expansion is underway, female slaughter falls relative to steer slaughter as cow-calf producers hold back both cows and heifers from slaughter to increase the size of their breeding herds. Conversely, when liquidation is underway, female slaughter increases relative to steer slaughter as both cow and heifer slaughter accelerate. To date in 2017, female slaughter as a percentage of steer slaughter has been higher than a year ago every month, except February. Although the female slaughter pace is running ahead of last year, it’s been about the same, or somewhat below, both the five- and 10-year averages for each respective month this year. Considering this longer-term perspective, the slaughter data suggests that interest in expansion has slowed down, but it does not suggest that any herd liquidation is underway.

An additional consideration with respect to herd expansion/contraction is the, as of now, unknown impact hurricane Harvey will have on Texas cattle producers. Texas is home to the largest beef cow inventory of any state in the nation and, as of this weekend, 54 Texas counties, where over 1 million beef cows reside, were declared disaster areas. How large of an impact the storm will have on both fall 2017 calf marketing and cow inventories is not clear, but the magnitude of the rainfall totals and resultant flooding point to the potential for significant calf and cow losses.

Cash prices for slaughter cattle have fallen sharply since peaking in early May at $145 per cwt. Cash trade in the Southern Plains for slaughter steers last week took place primarily at $107 per cwt., nearly $3 lower than the prior week’s average. It was the sixth consecutive weekly decline for cash slaughter cattle prices. After trading well above prior year levels during much of the spring, prices have now traded below the year-ago level for the last four weeks. In 2016, slaughter steer prices bottomed out in October at $98 per cwt. Slaughter cattle prices this fall are not expected to drop that far, but cattle feeders’ reactions to declining profitability will be important. If feeders resist selling cattle in expectation of higher prices, it could push weights and beef production up, which would exacerbate price weakness.

Prices for 500- to 600-pound steers in Kentucky have also declined since peaking in early June at $168 per cwt. The last two weeks 500-600 pound steer prices in Kentucky averaged about $147, close to the year-ago level. Calf prices tend to weaken seasonally from summer into fall as supplies increase. During fall 2016, steer calf prices in Kentucky bottomed out at about $112 per cwt. Expectations for somewhat stronger fed-cattle prices than in 2016, combined with expectations for more favorable costs of gain, are expected to provide more support for calf prices this fall than last. That could provide a fall quarter average for 500- to 600-pound steers ranging from the high $120s to the low $130s.

US Cattle on Feed

US Cattle on Feed

Kentucky 500-600 lb. steers

Kentucky 500-600 lb. steers

TAGS:

TEAM LINKS:

RELATED RESOURCES

Indiana Farm Income Outlook Report, Spring 2025

May 14, 2025

The Spring 2025 Indiana Farm Income Outlook, published by the Rural and Farm Finance Policy Analysis Center (RaFF),  provides updated projections for Indiana farm profitability through 2026. The report highlights a projected 40% increase in Indiana net farm income in 2025—driven largely by higher government payments—and offers insight into trends in crop and livestock markets, production expenses, and policy impacts.

READ MORE

Ag Lease 101: Lease Publications & Forms from NCFMEC

September 23, 2024

AgLease101.org helps both land owners and land operators learn about alternative lease arrangements and includes sample written lease agreements for several alternatives. Ag Lease 101 was created by and is maintained by the North Central Farm Management Extension Committee (NCFMEC).

READ MORE

Trend in Breakeven Prices for Cattle Finishing

November 14, 2023

Fed cattle prices have strengthened the last few months. At the same time, due to lower corn prices, feeding cost of gain has also declined. Partially in response to these two phenomena, feeder prices and breakeven prices have increased substantially.

READ MORE

UPCOMING EVENTS

Purdue Flexible Lease Workshop

September 16 at 7 pm or September 23 at 9 am

The Flexible Lease virtual Workshop, presented by the Purdue Extension Land Lease Team, will include a presentation and discussion to help you decide if a flexible land lease arrangement is right for your farm.

Read More

2026 Crop Cost and Return Guide

September 16, 2025

The 2026 Purdue Crop Cost and Return Guide provides estimated costs and net returns for planting, growing, and harvesting corn, soybeans, and wheat in the upcoming year. Cost and return information presents information for low, average, and high productivity soils. Early projections point to slightly higher breakeven prices.

READ MORE

2025 Farmland Values & Market Trends

September 9, 2025

Purdue ag economists Todd Kuethe and Michael Langemeier as they discuss Indiana farmland values on this, the first of two episodes reviewing the 2025 Purdue Farmland Values and Cash Rental Rates survey results. The survey shows Indiana land prices continue to rise and are anticipated to continue a modest increase for the rest of 2025 for most of the state.

READ MORE

Farmland Prices Increase Despite Downward Pressure, Purdue Ag Econ Report August 2025

August 19, 2025

Indiana farmland prices have continued the trend of record highs in 2025, according to the latest Purdue Farmland Value and Cash Rents Survey results. The average price of top-quality farmland reached $14,826 per acre, a 3.0% increase from June 2024. Statewide, cash rents increased from 1.5 to 1.7% for poor-, average-, and top-quality land.

READ MORE