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Strong demand driving cattle placements

Source: Wikimedia Commons

AUDIO: Lee Schulz, Iowa State University Extension and Outreach

The United States Department of Agriculture’s recent Cattle on Feed report brought some surprise. The number of feedlot placements in January totaled 2.07 million head, four-percent above pre-report estimates and 2017. A livestock economist discusses factors influencing January placements and gives a future outlook.

Lee Schulz serves as livestock economist for Iowa State University Extension and Outreach. Schulz says the upward trend in feeder cattle placements is two-fold.

“We have more cattle now, as we’re several years into expansion. We’ve seen large calf crops. That’s led to larger feeder cattle numbers; we’re seeing those placements into feedlots. The pull on those feeder cattle supplies is the demand situation. We’re seeing strong demand for beef and that’s leading to strong demand for feeder cattle into feedlots,” Schulz said.

Schulz says demand for beef, both domestically and internationally, continues to grow.

“Beef on the domestic market, fairly strong,” Schulz said. “We are transitioning into a key period for beef demand as baseball season and the ramp-up to summer grilling is the benchmark of how strong demand is going to be. We’re starting to see packers place those future purchases ahead, so they’re ramping up the demand. The export situation has been strong for beef demand. That’s helped really absorb our increase in the beef supplies that we have.”

Schulz expects to see a continuation of larger on-feed numbers moving forward.

“I think placement numbers are likely to be above year ago levels because of larger numbers. The key number I continue to watch is marketing,” Schulz said. “‘How aggressively are feedlots marketing those cattle? Are packers pulling cattle ahead because there’s strong demand?’ If we keep that marketing pace up, I think (the) market will sustain prices t because that will be indicative of that strong demand situation.”