Cattle-on-Feed May marketings down; to pressure summer f

Cattle Market & Farm Reports, Editorials
Dec 20, 2007
by WLJ
USDA= s June 1 Cattle-on-Feed report was called mostly bearish to the summer and early fall fed markets, while being friendly to cattle marketed at the end of the year, beginning of 2006. Analysts said that May marketings and volume of A heavy-weight@ placements were not friendly at all, while a significant decline in all other weights of cattle placed was very good news.
According to USDA= s National Agriculture Statistics Service (NASS), cattle feeders sold 2.0 million head of cattle, one percent below last year and 11 percent below 2003. The large majority of analysts had predicted marketings to be mostly steady with last year, particularly with one extra business day during this past May, compared to last year.
AThe fact that we are down, even a little bit, is very disappointing and not good news, especially when there was one more day to sell cattle, compared to (May) 2004,@ said Jeff Ackerman, analyst with A&A Commodities, Des Moines, IA. A On a daily marketing rate basis, cattle feeders sold six percent fewer cattle last month, than May of last year. Even if marketings for the month were steady, on a daily basis that is five percent smaller. That= s not the way to keep show lists current, particularly when beef demand is > sketchy, at best= .@
The number of cattle on feed four months or longer, as of June 1, was 111 percent of last year and 110 percent of the previous five-year average, according to analysts.
AFront-end supplies are definitely weighing heavy on the market, and could do so an extra long time this summer,@ Ackerman said. ACome mid- to late-September we could still be trying to get through cattle that have been held an extra two to four weeks by feedlots.@
Andy Gottschalk, analyst with HedgersEdge, indicated that, from a percentage standpoint, the worst is still yet to come. Gottschalk= s projections show that the number of 120-day-plus cattle will drop to 107 and 106 percent of a year ago on July 1 and Aug. 1, respectively. However, he also said that figure would jump up to 118 percent Sept. 1, 115 percent Oct. 1 and 117 percent Nov. 1.
In addition to the slower marketings, analysts said the fact that heavy weight placements were much larger last month would add even more price pressure to late summer, early fall fed prices. According to NASS, cattle feeders placed 735,000 head of 800-pound-and-heavier cattle into feedlots last month, 20 percent more than May of last year.
Market sources said that a lot of wheat graze-out cattle were sold during May, three to five weeks later than normal, and that led to an overabundance of heavy cattle finding new homes in feedlot pens last month. In addition, Ackerman said that above-normal grazing conditions led to cattle coming off of pasture and range much heavier than normal, and with more condition than is usual for this time of year.
AI think producers just let cattle get a lot bigger than normal, before deciding to pull them off of grass and take them to market,@ he said. AIn turn, the number of heavier cattle entering feedlots last month was skewed to the extreme. It will hurt in the long run, because some of those cattle could conceivably be ready to enter the market in September, when front-end supplies are still a concern.@
Gottschalk added, A Placements weights have been front-end loaded, which will only compound the problem with heavy fed cattle carcass weights this fall. The combination of a record total in the extreme front-end fed cattle supply and record carcass weights this fall will limit rebounds (early) this fall.@
Better news late fall, winter
While the number of heavy placements last month was overly large, the total number of placement cattle entering feedlots during May was well below last year. NASS indicated that a total of 2.22 million head were placed, six percent below a year ago, and four percent below two years ago.
Placements weighing 600 pounds or less totaled 435,000 head, down 12 percent from May 200; cattle weighing 600-699 pounds totaled 390,000 head, down 21 percent; and those weighing 700-799 pounds were figured at 663,000 head, down 14 percent.
Analysts were saying that an uptick in fed cattle prices is to be expected during the last quarter of 2005, because of fewer-than-normal cattle expected to be ready for market over that period of time.
Jim Robb, chief analyst at the Livestock Marketing Information Center (LMIC), said that fewer feedlot placements last month was the result of more interest from stocker operators, particularly those in the central Plains and Midwest.
AThe drop in lightweight placements is indicative of Iowa, Nebraska and Kansas stocker operators coming into the southern Plains and Intermountain West and buying cattle to put back on their pasture and rangeland,@ Robb said. AThat is almost strictly a result of much better-than-normal grazing conditions across the country.@
He also said, however, that last months placement trend appeared to be more normal than abnormal.
ARemember, cattle feeders placed a record number of cattle in May of last year, and now we are starting to see things go back to a more seasonal trend, where cattle are going back to grass in the spring to be sold to feedlots in the fall,@ Robb concluded.
Cattle and calves on feed for slaughter market in the U.S. totaled 10.77 million head on June 1, one percent above last year and two percent more than two years ago. C
Steven D. Vetter, WLJ Editor
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