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Northwest Iowa Dairy Outlooks

A local discussion of current science and issues concerning dairying in northwest iowa

Last Friday the USDA released the cattle inventories and the survey results generally came in at or above pre-report estimates. Monday’s CME Daily Livestock Report indicated that in the short term the report could be construed as somewhat bearish for cattle prices, the report also confirmed that US cattle supplies will continue to decline in the next two to three years, paving the way to even higher beef prices.

US cow-calf operators show no signs of herd rebuilding despite record cattle prices achieved in the first half of this year. Heifers held back for beef cow herd rebuilding declined 4.5 percent compared to a year ago. Pre-report estimates were looking for a 3.3 percent decline. The calf crop for 2011 was estimated at 35.5 million head, just 0.5 percent lower than a year ago, compared to pre-report estimates which expected the calf crop to decline 1.5 percent.

While the low heifer retention number was long term bullish for cattle prices, the much larger calf crop is bearish in the short term.

The survey showed that July 1 cattle on feed inventory was 3.8 percent larger than a year ago, compared to pre-report estimates looking for a 2.7 percent increase. Producers placed 4.1 percent more cattle on feed compared to pre-report estimates looking for a 6.6 percent decline in placements.

Drought in the Southern Plains caused producers to pull some calves forward. Interesting to note the change in placements compared to previous month. June placements were down 115k head compared to May. Last year, June placements dropped 402k from prior month.
Texas and Kansas showed net increase in placements compared to year ago, with much of the gains coming in the lighter weight categories (less than 700 pounds).

This should come as no surprise to few producers in the Rolling Plains. No hay or range coupled with no water means cattle will go to auction. Producers know that you can haul hay or haul water; but if you have to haul both it is time to cut numbers and they are doing just that with record numbers at several local auctions.

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