Livestock Market Comments
COVID-19 Ripples to Cattle on Feed Report
April 21, 2020
David P. Anderson
Professor and Extension Economist
Livestock and Food Products Marketing
The first COVID-19 Cattle on Feed report will be released on April 24th. This report will track the first rippling events from the shutdowns that occurred across the country. The extreme events mean that pre-report estimates are pretty tough to do. You have to throw out most past statistical relationships and do your best.
There was one more slaughter day in March, 2020 compared to 2019. But, also important was the impact of the collapse in the live cattle futures contract on basis in moving cattle to market. Over the course of the month the April live cattle contract dropped from $111 to $83 per cwt on April 6th. Marketings should be up about 12.7 percent over March, 2019. About 1500 fewer slaughter cattle were imported from Canada in March (that data includes cull cows).
Placements are the tough one. As restaurants shut down, consumers stampeded grocery stores and distancing rules and other regulations were put in place amid collapsing futures prices. Feeder cattle receipts were down about 47 percent in March compared to last year. About 23,000 fewer feeder cattle were imported from Canada and Mexico. There was a big slow down in cattle movements through auction markets that continued in April. Cash calf prices did not appear to have fallen commensurate with fed cattle futures prices. I have placements down 20 percent from a year ago. There are some other analyst estimates that are even smaller. That would mean that March placements were smaller than those in February, a rare event. March placements are typically fairly large due to wheat pasture cattle placements and more days compared to February (the largest placements occur in the Fall).
The combination of large marketings and very low placements should drastically reduce the number of cattle on feed. I have April 1 COF at 95.0 percent of a year ago. Sharp declines in cattle slaughter and beef production have occurred as packing plants have either shut down or slowed processing. This report will be evidence of further ripples through cattle and beef system. So far through April feeder cattle receipts continue well below a year ago and, anecdotally, cattle runs at local auctions are reported to be 50 percent of a year ago. Fewer cattle on feed will translate to ripples through future cattle slaughter, dressed weights, and beef production going through the year.