Iowa Farmer Today
11-11-06
Weights, numbers to press market
By Jeff DeYoung, Iowa Farmer Today
Record slaughter weights and cattle-on-feed numbers could create pressure on the fed cattle market this winter.
John Lawrence, ISU Extension livestock marketing economist in Ames, warns feedlots to be prepared for red ink.
“I’m concerned about this winter, with record weights and then the record cattleonfeed numbers in October,” he says. “We’re going to have a supply challenge with the cattle headed to mark et.”
Lawrence says some of the record cattle-on-feed numbers can be attributed to more calves heading to the feedlot earlier due to pasture and forage shortages this past summer.
“If we still have record numbers in January, then we will have reason for c oncern,” he says.
“The concern is when those cattle come to market. Because they came in at lighter weights, there is more uncertainty about when they will come out.”
He adds a scenario could be developing that is similar to what happened in 1995, when corn prices rallied during harvest.
“We had our fed cattle price peak in November, and then went down until May, which is counter-seasonal to what we usually see. These corn prices we have seen recently could cause this same sort of thing to happen again.”
Lawrence says price pressure could send a large supply of beef into the market, adding that comes when domestic demand for beef is weaker than it has been.
“Gas prices have moderated some, and the economy has grown a little.
“But, if you have a backlog of cattle, do you sell those because feeding them is too costly, and push the others ahead a little harder and sell those, too? That will really cause some pressure on prices.”
Higher corn prices also have pressed feeder cattle prices, although Lawrence expects cow/calf producers to remain profitable.

“If you figure it takes 75 bushels of corn to finish a five-weight steer, that is going to take a bite out of your bottom line.
“Even if a cow-calf producer is selling those 500-pound calves at $1 a pound or more, he is still going to be profitable, but obviously not as much as he has been.”
Drought conditions over the summer have tempered any planned expansion in the cow herd, Lawrence notes.
He says hog prices have held together better than expected, considering the large supply of pigs heading to market.
Higher feed costs will push break-even prices higher over the coming weeks to as much as $45 per hundredweight by the end of the year, Lawrence says.