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Cattle on Feed report shows strong placements

Feedlot

The USDA Cattle on Feed report released March 25 was largely neutral, but it did show a few trends in the industry, says Stephen Koontz, ag economist with Colorado State University. Writing an “In the Cattle Markets” column for the Livestock Marketing Information Center, he says the placement numbers were eye-catching.

“Placements were decidedly strong and, while within the range of expectations, were at the very top end of that range,” Koontz says. “Pre-report expectations anticipated that placements would be 106.3% of last year with a range of 104.0 to 109.8%. Actual placements during the month of February were 109.3% of the prior year at 1.848 million head.”

He says there are a number of reasons for the placement trends, and while there was some short-term bearish activity in cattle futures, the long-term market outlook looks good.

“Dry weather, poor pasture in the Southern Plains, and specifically poor wheat pasture, have led to stronger feeder cattle movements into feedyards,” Koontz says. “It is also anticipated that placements through April and likely into May will be more modest than typical. Thus, while the intermediate term is bearish, the long-term or end-of-the-year market outlook is more optimistic.”

The report showed strong fed cattle marketings, which could provide some near-term bullish news.

“Fed cattle marketings were also strong,” Koontz says. “Pre-report expectations anticipated that marketings would be 104.3% of last year with a range of 103.3 to 104.6%. Actual marketings during the month of February were 104.9% of the prior year at 1.825 million head. This is clearly bullish news in the short-term. The inventory of market-ready cattle continues to be reduced and will place less pressure on meatpacker operations.”

Cattle on feed inventories were large in the report, he says. This was expected, but on the high end of projections. Early March saw an inventory of 12.163 million, down only modestly from early February’s record large inventory of 12.199 million head.

“Pre-report expectations anticipated that on-feed inventory would be 101.1% of last year with a range of 100.8 to 101.5%,” Koontz says. “Actual inventories were 101.4% of the prior year and within the range of expectation but to the high side because of the heavy placements. Not entirely as expected but certainly explainable given the weather conditions impacting the feeder cattle system.”

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Ben Herrold is Missouri field editor, writing for Missouri Farmer Today, Iowa Farmer Today and Illinois Farmer Today.

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