CATTLE REPORT INDICATES SHORT-TERM GAINS FOR CORN, LONG-TERM CHALLENGES

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(Posted Mon. Oct 24th, 2011)

Oct. 24: Cattle in U.S. feedlots has risen to 11.3 million head, a five percent increase since this time last year, according to a U.S. Department of Agriculture report released last week. Additionally, the number of cattle placed on feed rose slightly from 2010 also. Texas, the state with the largest feedlot industry, in particular saw inventories rise to 2.95 million head, a 12 percent increase over Oct. 1, 2010.

 

In the near future, this increased demand for feed will boost demand for corn. The initial rise in demand is not likely to be sustained, however, as the cattle cycle as a whole continues to contract. This influx of cattle into feedlots and subsequent contraction of the overall cattle industry are some of the lingering ill effects of the devastating drought that set into the southern Plains last fall. Currently, these drought conditions persist without sign of imminent relief.

 

“This year, farmers and ranchers alike have faced weather-related challenges,” said National Corn Growers Association Corn Board Member and feedlot owner Jon Holzfaster. “While corn growers experience a transitory benefit from increased feedlot inventories, it is important to remember that the livestock industry remains the largest market for U.S. corn. As complimentary parts of the overall food system, we rely upon the continued health of our fellow producers and hope that both our farmers and ranchers in the southern Plains will soon benefit from a badly needed end to the drought.”

 

As these dry conditions decrease available pasture, cattle are being moved into feedlots both in larger numbers and at lighter weights. These lighter calves boost corn and corn co-product consumption as they require larger amounts of feed to gain the weight normally put on in pasture. At the same time, ranchers are being forced to retain fewer replacement heifers in order to remain viable thus perpetuating the decline in total cattle numbers. Should this situation persist, the corn industry could see overall demand from the cattle industry decline in the long-term as the effects of contraction in the cattle industry reduce feedlot inventories.