Posted by Gilmour Poincaree on November 27, 2008

Posted on Tue, Nov. 25, 2008

by Roxana Hegeman – The Associated Press

WICHITA, Kan. – At a time when the consumer appetite for beef is waning amid the economic downturn, the number of cattle going into feedlots in Kansas and across the nation also has taken a steep dive.

The latest cattle-on-feed statistics come at a time of high input costs for fattening the beef and deep losses for the nation’s cattle-feeding industry.

On Monday, the Kansas Agricultural Statistics Service reported that the state had 2.23 million head of cattle in its large feedyards as of Nov. 1. That number is down 8 percent from the same month a year ago, but up 3 percent from last month.

Cattlemen during October also placed 15 percent fewer cattle on feed, meaning the available slaughter supply will remain tight in the coming months. The number of animals leaving the feedyard for slaughter was down 12 percent in October, compared with the same month last year in Kansas.

At Hitch II feeders, assistant manager Dale Nicodemus said the feedyard near Garden City is running at less than three-fourths full. The feedyard has a capacity of 45,000 head.

“At this time of year that is significant. Most of the time we are jammed full at this time of the year,” Nicodemus said.

Some of the smaller feedyards , those with a capacity of fewer than 1,000 head of cattle , are empty and for sale, he said.

“Normally we are very full this time of year. The fall run was very small this year , almost nonexistent,” Nicodemus said.

He blamed the smaller numbers of cattle coming into the yard in part to a wetter year in Kansas that has allowed cattle to remain on grazing longer and to drought conditions elsewhere that have forced producers to cut the size of their herds.

The Kansas numbers were reflective of trends nationwide.

The U.S. inventory of cattle and calves on feed totaled 11 million head on Nov. 1, down 7 percent from the same month last year. Placements nationwide during October were down nearly 11 percent below 2007 to 2.44 million cattle, while the number of animals leaving the feedyard for slaughter were down 3 percent from last year to 1.81 million cattle.

While cattle supplies have tightened a little more than the industry was expecting before the report came out, the big story remains what is happening to the demand side, said James Mintert, a Kansas State University economist.

Industry experts say the economic downturn may continue to affect the demand for beef, particularly more expensive cuts such as tenderloin, as cash-strapped consumers turn to cheaper cuts or to chicken or pork.

Prices for tenderloin at the beginning of July were running about the same as a year ago. Two weeks ago, they were 28 percent to 32 percent below last year. They recovered slightly in the past week and are now running about 12 percent to 13 percent below a year ago.

“That is indicative at the wholesale level of buyers backing away from high-valued cuts because they were concerned about their ability to market to consumers in an environment where everybody is worried about their income, everybody is worried about what is happening to their asset values,” Mintert said.

Those cattle industry concerns also are reflected in the futures market. Since Labor Day, live cattle futures have dropped $20 a hundredweight because of concerns about domestic and export demand, Mintert said.

“We hope that demand can rebound when the economy starts to grow again,” said Todd Domer, spokesman for the Kansas Livestock Association. “Nobody knows when and if we’ve reached bottom yet.”


BISMARCK, N.D. (AP) , North Dakota’s Mill and Elevator reported a $12 million loss during July, August and September, which its manager said was the largest quarterly loss in the 86-year history of the state-owned mill.

Vance Taylor, the mill’s general manager, blamed the loss on large price swings for hard red spring wheat last spring, along with turbulence in the futures markets , which the mill has used to limit its financial risks , and a decline in flour demand.

In its last budget year, which ended June 30, the mill lost $821,607. It was the flour mill’s first annual loss since 1994.

William Wilson, a North Dakota State University economics professor, told the state Industrial Commission on Monday that grain market volatility is likely to continue for three to five years.



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