Few surprises in cattle on feed report

Nov 25, 2011

USDA’s monthly cattle on feed report, released Nov. 18, contained few surprises and is being viewed by the trade as neutral for CME Live Cattle futures, according to Steve Meyer and Len Steiner’s CME report.

Cattle and calves on feed for slaughter market in the U.S. for feedlots with capacity of 1,000 or more head totaled 11.9 million head on Nov. 1, 2011. The inventory was 4 percent above Nov. 1, 2010. This is the second highest Nov. 1 inventory since the series began in 1996.

Placements in feedlots during October totaled 2.49 million, 1 percent below 2010. Net placements were 2.4 million head. During October, placements of cattle and calves weighing less than 600 pounds were 805,000, 600-699 pounds were 600,000, 700-799 pounds were 501,000, and 800 pounds and greater were 585,000.

The Nov. 1 year-on-year increase of 3.7 percent is the lowest this year. Only one month in 2011 (June) had placements significantly lower than last year, but analysts expect placements to be consistently lower than year-ago for the next few months.

The 2.49 million October placement is the third month in a row that 2011 numbers have matched those of 2010 but this is the first month since June that placements have been close to the 2005- 2009 average, deemed as normal.

According to USDA, there were 2.6 percent fewer calves and feeders outside of feed yards on July 1.

July, August and September placements exceeded the five-year average by 21.5, 6.7 and 5.8 percent, respectively.

Placement weights came in average for the second month in a row after spending the first eight months of the year well below the past five years’ average.

The October average of 684.4 pounds compares to 712.7 pounds in September and 691.5 in October 2010. October placements saw 32 percent under 600 pounds, compared to 29 percent, 25 percent and 29 percent, respectively, for the past three years.

This year’s drought-driven beef cow liquidation will negatively impact cattle supplies for the next 18-24 months, according to analysts.

Economists say finding cattle for feedlots may get even harder. Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel said the fall run of calves continues to be smaller than usual since many cattle in the southern Plains hit sale barns early due to the severe drought.

Marketings of fed cattle during October totaled 1.79 million, 3 percent above 2010.

Other disappearance totaled 93,000 during October, 50 percent above 2010. That marks the highest monthly figure since May 2010 and the highest figure for October since 2003. —Traci Eatherton, WLJ Editor