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Texas economist believes increased placement figures not bad news since a large percent of cattle entering the feedyard are heifers. The first of the year, the industry was worried about placement figures for cattle going into the feedyard. At 120 percent of 1997's figure, it was bad news. But Jim Sartewelle, a risk management program specialist with the Texas Extension Service, was looking at the mix of those cattle. What that mix portends for the future of cattle feeding may be good news. A number of those cattle were heifers, and with the number of heifers going into the feedyard instead of into the nation's herd, overall supply numbers should be reduced. If demand stays steady, price should be solid. As of the first week of March, the cow slaughter was up a couple thousand head from the same week a year ago. The beef cow kill was slightly up. Heifer portion of the slaughter was high. "Right now heifers are about 33.4 percent of the beef cow slaughter, and cows are 16 percent," Sartewelle says. On Nov. 30, it was 31 percent heifers and 19 percent cows. "The female part of the slaughter's changed just a little bit," Sartewelle says. "It's changed in it's make-up. It hasn't changed its magnitude. The big thing is if you look back at the inventory reports, we liquidated beef cows by three percent over the last two years." When examining those numbers, Sartewelle says, beef heifers held for replacement were down five percent. "It's the most perverse thing in the world for a cow-calf producer to have to sit back and think things are going to get good because we're tearing down part of our factory," Sartewelle says. "We tore down part of our factory in terms of our cow herd base. We're showing right now that we have no inclination of building it back very quickly, which is good." Supply and demand is not a tough concept to grasp, the economist says. If cow-calf producers keep from expanding and nobody holds any heifers in 1999, the likelihood of increasing prices in the summer of 2000 would be great. "There ain't but two places for a heifer to go," he says. "If she ain't dying, she's being held in somebody's back trap, and he's thinking she's going to make the finest mother cow he's ever had." The market watches the placement figure in the feedyards, Sartewelle says. If replacements are down, they look out five months and think fed prices are going to be good. "We're all attuned to doing that," Sartewelle says. "Take a longer term barometer and follow once a month what's happening with beef production compared to last year. That gives you a good indication of what our box prices are going to be doing in the near term and what our trickle back demand signals are going to be for our calves, for our fed cattle, our steers, our stockers and for weaned calves. "Keep a close eye on what's happening to cow slaughter. That's your long term barometer." |
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