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Northwest Iowa Dairy Outlooks

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

The USDA report on Friday showed total on feed supplies were up 1.7% from a year ago, a full percentage point higher than pre-report estimates. Feedlots placed 15.3% more cattle on feed than a year ago, compared to the 14.2% increase that analysts expected.

The higher placement numbers were not a big surprise and likely already in the market. Feedlot placement numbers in March and April were limited and the May increase reflects this shift, in part due to better and more profitable wheat feeding conditions.

Dry conditions may push a few more feeders to market in June but there is an expectation that July – Sep placements will remain below year ago levels and bring the overall feedlot numbers below year ago by August or September. The weight distribution of the placements in May shows some interesting patterns. Total placements were 2.087 million head, 277,000 head or 15.3% higher.

About 40% of the increase in placements came from placing feeders 600 pounds or lighter. Coming into the report there was speculation that feeders from Northern states were being pushed into feedlots due to dry conditions. However, the report showed that much of the increase in very light feeders came from Texas and Kansas.

On the other end of the spectrum, the data showed that placements of yearlings weighing over 800 pounds increased by 112,000 head or 20% from a year ago. More than half of the increase in +800 lb. feeders came from NE/CO. Almost all the increase in placements came from either the very light or very heavy categories, reflecting the effects of keeping animals on graze out wheat (south) or keeping them longer on grass (north).

Takeaway: A moderately bearish report, mostly for short term supplies. Longer term, the cattle market still is facing an overall shortage of calves and ongoing beef cow liquidation all but assures tight cattle supplies into 2014.

Total beef, pork and poultry supplies as of May 31 were 2.282 billion pounds, 3.6% higher than a year ago and 7.8% higher than the five year average. Beef ending stocks were 498.6 million pounds 11% higher than a year ago but lower than pre-report estimates.

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