Cattle on feed Sept. 1, 2014 of 9.799 million were down 1% from a year ago and just a tad above trade expectations.
August placements at 1.720 million were down 3% from last year and a shade above trade guesses.
August marketings, at 1.692 million were down 10% from last year and a shade above pre-report guesses.
It would be easy to construe the somewhat larger than expected marketings as a tad friendly. The logic: cattle that have already come to market can't come later.
However, that potential up pressure is offset by somewhat larger than expected placements, which boosted the Sept. 1 on-feed inventory a bit above expectations.
Despite being a bit higher than expected, lower than year-earlier placements and lower than year-earlier inventories point to continuing tight beef supplies going forward.
Wrinkles in measuring herd expansion
Many people are pondering how feedlot inventories keep working lower when the number of heifers kept for breeding July 1, 2014 was also lower than two years ago. The notion being that if cow-calf producers sold them to feedyards, those heifers would bolster feedlot inventories a bit.
Much better grazing conditions than a year ago, everywhere except the west, should be luring cow-calf producers to expand herds. Even in the west, this year's grazing conditions are somewhat better than a year ago.
Altin Kalo, Steiner Consulting Group, Manchester, NH, notes that for the four complete weeks in August heifer slaughter was down 85,151 head or 11.6% from last year. Steer slaughter during the same period was only 29,343 head or 2.3% lower. "The lower heifer slaughter implies higher heifer retention last winter and spring and yet USDA's July 1 heifer number was almost surely lower than one year ago."
Mid-year inventory comparisons pit July 1, 2014 values against July 1, 2012 values. USDA conducted no mid-year survey in 2013 due to funding cuts due to the budget sequestration. Lack of 2013 mid-year data makes mid-year comparisons challenging. That's particularly crucial because a turning point in the cattle inventory cycle is at hand.
Feed yards may be breeding grounds
"We have heard talk — and a lot of it — that offers an explanation of these seemingly conflicting observations," notes Steve Meyer, Paragon Economics, Adel, Iowa. "Feedlots are breeding heifers and selling them as replacements.
"The practice is not new. But it does appear to be more widespread this year," he notes. "It would also explain why both heifer retention and heifer slaughter are low."
"Plus it makes a lot of sense. Feedlots can manage heifers to meet a number of goals and making replacements is a very possible one, especially given their current value. Further, feedlots have handling equipment that can be easily adapted to breeding the heifers using artificial insemination. Finally, feedlots' relationships with custom feeders, ranchers and feeder cattle suppliers should make marketing the heifers easy."
Suppose a significant number of heifers currently in feed yards eventually do go back into beef cow herds. Those heifers should get reflected in other disappearance on Cattle on Feed Reports.
USDA pegged other disappearance during August at 66,000, up 16,000 head or 32% from the August 2013 other disappearance. Those 16,000 head could be heifers that will eventually turn up in cow herds.