U.S. cattle herd growth slows despite record corn harvest
CHICAGO - Demand for corn to fatten up U.S. cattle is likely to climb in the short term, as ranchers send more breeding females to feedlots to reduce the number of calves coming into supply. But next year, corn consumption could decline as there ...
CHICAGO - Demand for corn to fatten up U.S. cattle is likely to climb in the short term, as ranchers send more breeding females to feedlots to reduce the number of calves coming into supply.
But next year, corn consumption could decline as there will be fewer cattle as a result of the current heifer cull.
Ranchers are rushing to reduce their herds as per-pound prices for cattle hover near five-year lows, pressured by plentiful supplies of pork and chicken.
The number of heifers heading to commercial feeding pens rose 4 percent in the quarter ended Sept. 30 from a year ago, according to the U.S. Department of Agriculture. More could be on their way as prices stay low and calves are weaned, analysts said.
"I would anticipate that they (ranchers) are going to cut their herds again because of the financial situation," said South Dakota feedlot operator Herman Schumacher. "It's been a wreck."
Cattle in feedlots are typically fattened to about 1,300 lbs from 800 lbs on arrival, munching through about 7 pounds of feed for every pound of weight gain.
"Feedlots will initially use more grain because they'll have more animals as a stop-off before heading to the packing plants," said John Ginzel, analyst with Chicago-based Linn Group. This would further depress beef prices, he added.
The USDA forecasts corn use for feed will hit 5.7 million bushels in the year that began Sept. 1, up from 5.2 million in the previous period.
That could underpin corn prices, currently languishing near two-year lows around $3.50 per bushel for December delivery on the Chicago Board of Trade.
But reducing the number of heifers will mean fewer calves, which should trim demand for corn beginning in late 2017, given it takes roughly 18 months for a calf to reach maturity.
Ranchers hope they can hang on long enough to see prices for their animals recover as the cutback in supplies works through.