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Analyst: producers moving heifers to feedlots

An analyst says the latest USDA cattle numbers are more burdensome than indicated in Friday’s Cattle on Feed report.  Allendale Chief Strategist Rich Nelson tells Brownfield that producers are not retaining heifers for breeding, but instead intend to feed them for slaughter.

“In the short term this is bad news for us, meaning we’ve got to deal with this extra supply spread out over the next easily six to 12 months, in fact,” Nelson told Brownfield Ag News Monday.  “On the positive side, for the long term, we’re stopping expansion, which means by around 2018, certainly by 2019, that’s when we start to see smaller beef supplies hit this market.”

Nelson adds that the report may further mislead because of the number of weekdays in July versus the number of Saturdays, skewing the number of slaughter cattle marketed. Nelson says that adds a few tenths of a percent to the total number of cattle reported on feed as of August 1.

“From the producer perspective we still have some trouble with us here for the next six to 12 months, but after this point, perhaps we’ll see some better news ahead,” he said.

Nelson says cash prices on cattle are likely to fall before rebounding.

AUDIO: Rich Nelson (3 min. MP3)