Archive for Tuesday, October 23, 2001

Feedlots struggle as prices drop

October 23, 2001

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— At the Winter Feedyard in Dodge City, owner Ken Winter figures he is feeding 10 percent more cattle today than a year ago at this time.

Winter has one of many feedyards across Kansas that are reporting a backlog of record heavy cattle many held off from market by feeders reluctant to sell them at a loss because of plummeting prices, said Rodney Jones, an agricultural economist at Kansas State University.

The big Kansas feedlots had 2.54 million head on feed on Oct. 1, up 10 percent from a year ago and 2 percent more than a month earlier, Kansas Agricultural Statistics Service said in its newly released September livestock report. By comparison, the U.S. inventory of cattle on feed was 1 percent above this time last year.

Cattlemen are losing between $85 and $100 per head coming out of feedlots to market, Jones said.

"It is not fun losing the kind of equity we are losing right now," Winter said Monday. "We have taken some risk protection through the futures market, and that has helped some, but we can't go on like this for very long."

Winter knows of at least two other feedlots in Kansas that have recently gone up for sale.

And in northwest Kansas, St. Francis cattle feeder Mike Callicrate can name four other feedlots in Kansas and nearby communities in Nebraska and Colorado that filed for bankruptcy protection in the last week.

Meanwhile, feeders are obviously reluctant to put any more cattle in feedlots when budget projections are for further losses, Jones said.

Kansas placements in September totaled just 470,000 head down 18 percent from a month earlier, and down 13 percent from a year ago, the statistics service said. Nationally, placements in feedlots in September were down 20 percent.

More cattle feeders are holding on to their cattle, allowing cattle weights to get heavier and creating a significant backlog of heavy cattle that will need to be marketed in the short term.

The five-year average for federally inspected dress weights per animal has been 730 to 735 pounds, Jones said. But the dress weights of animals now being slaughtered are running well over 760 pounds and that translates into increased meat supplies all through the system, Jones said.

Callicrate said the United States imports 20 percent of the beef consumed in this country. He blames the big packing plants for driving down the cattle prices with talk of a backlog of cattle.

"There is no way we have too many cattle on feed that is an absolute lie," he said.

Clayton Huseman, director of feedlot services for the Kansas Livestock Assn., said the big supply of cattle on feed now were placed several months ago. That supply is now affecting the current feed cattle market, he said.

Huseman expected cattle prices to rise in the first quarter of 2002, reflecting the tightening cattle numbers.

If the latest government cattle-on-feed numbers are any indication, the number of cattle going to slaughter will probably take a sharp drop early next year once that backlog works its way through the system and the fewer animals just now being put on feed in feedlots are ready to slaughter, Jones said.

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