Weekly Market Update- Cattle on Feed Report and Continued COVID-19 Impacts

The processing plant closures and shut downs continue to occur. In Wisconsin, JBS in Green Bay has temporarily closed down. The COVID-19 hits just keep coming. The market also saw on Friday the first Cattle on Feed Report since the extreme events and shutdowns have occurred.

On Friday, April 21, 2020 the Cattle on Feed report was released and provided further insight into COVID-19 impacts on the cattle industry. March was the beginning of the COVID-19 impact on the collapse in the live cattle futures contract and cash markets. During March, restaurants began to shut down and consumers panic shopped at their local grocery stores; meanwhile the April live cattle contract dropped from $111 to $83 per cwt by April 6.

Feeder cattle receipts were down 47% compared to March 2019.  Auction markets saw significant slow down that continues through April. However, cash calf prices have not dropped as much as finished cattle prices. Friday’s report indicated the March placements totaled 1.56 million head, 23 percent below 2019.  This number indicates a lower placement than pre-report estimates and means that March placements were smaller than those in February at 1.72 million head. March placements are typically higher as cattle are exiting wheat pastures, as well as March having more days as compared to February.

Marketing in March 2020 were at 2.01 million head, up 13% from March 2019. Note that this increase highlights the number of cattle pulled forward in March as this increase still accounts for the decrease in cattle (including cull cows) being imported from Canada.  Some of the marketing increase is due to one more slaughter day. The additional day accounted for approximately 5% of the increase in marketings, whereas the additional increase was impacted by the collapse in the live cattle futures contract. The April report shows 4.5 million head on feed for greater than 120 days. Although the increase in cattle on feed greater than 120 days isn’t out of the norm at this time of year, the concern become the significant increase in cattle on feed greater than 150 days.

The combination of large marketings and very low placements drastically reduced the number of cattle on feed.  Cattle on feed on April 1, 2020 are at 11.3 million head, down 5.5%.  Fewer cattle on feed will translate to lower slaughter, higher dressed weights and lower beef production.

Written by: Dr. Brenda Boetel, UW Madison Division of Extension Livestock Economist

 

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