Thursday, February 20, 1997

Cattle inventory tightens and area prices continue rise

By J.T. SMITH / Farm Editor

The USDA's annual cattle inventory report shows a 2 percent decrease with 101 million cattle and calves in the nation's cattle herd.

Meanwhile, the Texas inventory - at 14.1 million cattle - is 6 percent smaller than a year ago.

The 1996 U.S. calf crop was 2 percent smaller than the 1995 production. The Texas calf crop was a full 5 percent smaller.

Cattle-Fax says cattle inventories will continue to decline through 1998.

Meanwhile, this tighter supply - and ample rainfall - has clearly boosted the cattle market in the Abilene region.

On Tuesday, Abilene Livestock Auction was $4-$6 per hundredweight higher on feeder steers and heifers at its weekly sale. Slaughter cows and bulls were $2-$4 per hundredweight higher.

Randy Carson, president of Abilene Livestock Auction, notes there is renewed optimism in the cattle market as we look toward spring. Replacement cows were $50-$100 per head higher at Tuesday's sale. Cow/calf pairs were $50-$80 per pair higher this Tuesday than a week earlier.

Mineral Wells Stockyards, which has its sale there each Saturday, reported replacement cows and pairs at $20-$30 higher this past weekend.

Feedlots getting a few more cattle

With the cattle outlook strong and feed (especially corn) cheaper than a year ago, the Texas feedlots are carrying a dab more cattle compared with a year ago.

Cattle and calves on feed for the slaughter market in Texas feedlots with a capacity of 1,000 head or more totaled 2.52 million head on Feb. 1, up 2 percent from a year earlier.

Nevertheless, that estimate was down 4 percent from the Jan. 1 level in feedyards.

Producers placed 385,000 cattle in commercial feedlots during January, up 21 percent from a year earlier.

Cotton and cattle do flip-flop

As recently noted, the National Cotton Council Planting Intentions Survey shows growers expect to plant a million fewer acres of cotton for the entire Cotton Belt.

About 500,000 acres of that anticipated national reduction will come out of Texas acreage.

Although the flexibility to plant virtually any crop through the new 7-year federal "Freedom to Farm" law is cited as one reason, the price slump also can't be overlooked when comparing the start of 1997 with the beginning of 1996.

The Texas Agricultural Statistics Service says the average price received by Texas cotton farmers for upland cotton for January 1996 was 76.4 cents per pound.

By contrast, the average price received by Texas cotton farmers for January 1997 amounted to a mere 64.2 cents per pound - or 12.2 cents per pound less.

That's a pretty substantial drop in cotton prices.

To many Texas farmers, such a price drop makes grain sorghum look like a good option to cotton, especially in this region. On the northern High Plains, commercial corn may displace some cotton acreage.

It's interesting that just the opposite happened to Texas beef cattle.

In January 1996, Texas producers averaged $59.50 per hundredweight for beef cattle.

This January, beef cattle raisers averaged $66.10 per hundredweight.

And this price strength for cattle has increased even more during February.

Hopefully, if grain sorghum does replace some cotton acreage, some of that locally grown grain sorghum can find a home in some regional cattle feedlots as at least a partial substitute for corn in the rations.