The deteriorated pasture and rangeland pushed many head of cattle into feedlots at an early point in their cycle, and Friday’s Cattle on Feed report reflected that glut, with a high number on feed, but low numbers entering feedlots and being marketed. With the weather still uncooperative, many livestock producers are concerned about the outlook for feed in the coming year. Will there be enough, given all of the dynamics pushing and pulling on the supply? Answers follow.
The January 20 Cattle on Feed Report indicated 11.9 million in feedlots, 3% above year earlier levels, with December placements 6% below prior numbers and December marketings 2% below prior levels. Other disappearance was 40% above December of 2010, which includes death loss, movement back to pasture, and shipments to other feedlots.
With hefty numbers in feedlots, will there being enough feed? USDA’s latest Feed Outlook says even though more cattle were in feedlots, there is more corn in the bin, and enough to offset lower sorghum production. The feed grain supply for the current marketing year is forecast at 358 MMT, with total feed use for the current marketing year at 334 MMT, reflecting higher corn exports. Domestic use is expected to be 290.5 MMT, down slightly reflecting lower projected feed use and lower sorghum supplies. Barley and oat production was unchanged. Wheat feeding is only addressed in passing “because of decreasing in projected feeding.”
Animal numbers are slightly higher, with grain consuming animal units forecast at 93.7, up from 93.3 million projected in December. Higher beef and pork production than was expected, but less poultry production is anticipated.
1) Corn projections have been raised slightly to 12.358 bil. bu., which is down by 89 mil. bu. from last year, but reflects increased acreage and lower yields. Feed use of corn is project at 4.6 bil. bu. September to December stocks disappearance was estimated at 1.838 bil., bu. down 233 mil. bu. from year ago.
2) Corn used for ethanol production was estimated at 5.0 bil. bu. up slightly from the same period a year ago, but increased production was attributed to blenders trying to get as much out of the VEETC tax as possible, which expired at the end of the year. And ethanol production is expected to slow early in 2012. Corn use will be about 5 bil. bu. and ethanol exports will grow slightly. Exports will be slightly larger to 1.650 bil. bu. and ending stocks should be 1.127 bil., resulting in an increase in feed stocks to 4.792 bil. bu.
3) Sorghum production is estimated at 214 mil. bu., down 132 mil. from year ago levels. Production is down as a result of less acreage and less yield per acre. Consequently lower sorghum for feed use is 20 mil. bu. less.
4) USDA lowered the price range for corn by a dime, and it now stands at $5.60 to $6.60 for the current year. USDA says strong demand from ethanol producers and tight supplies still exist.
Hay stocks on farms at the first of December totaled 91 mil. tons, down 11% from year ago levels. Disappearance for the May to December period totaled 62 mil. tons, and hay stocks declined everywhere except for the upper plains states. The declining supply was attributed to many livestock producers feeding it earlier than planned. All hay production totaled 131 mil. tons, down 10% from last year. Dry weather in the southwest reduced the production area to the smallest since 1930 and production to the least since 1925.
Following unusually dry conditions across the central and southern Plains states, which kept hay production down, abundant late August and early September rain promoted increased growth in many pastures and hayfields, increasing production from year earlier levels.
USDA says the termination of the ethanol blenders’ credit is not expected to affect demand and price considerably, however discretionary blending above the mandate could be negatively affected. While the renewable fuels mandate will keep ethanol production at a strong level, the production above the mandate, which is now being exported, may see lower levels of profitability and may be subject to reduction. Subsequently, USDA says that may be reflected in a lower demand for corn, but to a small degree.
Summary:
The shortage of pasture and rangeland in the southern plains that sent a larger than usual number of cattle early to feedlots, has moderated with the help of some rains. Nevertheless, there is still some tightness in both supplies of feed grains and hay. Feed grain production is lower due to less corn and sorghum yields, and hay production is down because of the weather. Ethanol production will consume larger than normal supplies of corn, and in fact, some reduction could be observed.