Source  Rita Jane Gabbett, MEATINGPLACE.COM, 10/19/09
      

USDA's Cattle on Feed report released Friday showed the first year-over-year increase in 16 months, reflecting optimism about future profits, according to Iowa State University Extension Economist Shane Ellis.

USDA estimated Oct. 1 cattle on feed on feedlots with capacity of 1,000 or more head at 10.5 million head, up 1 percent from a year ago. Placements in feedlots during September totaled 2.39 million, 5 percent above 2008. Marketings of fed cattle during September totaled 1.75 million, 4 percent below 2008.

USDA's figures came in roughly in line with analysts' expectations. Looking at placements by weight class, however, more lighter-weight cattle were placed on feed in September than during August, when heavier placements spiked.

Ellis told Meatingplace the lighter-weight placements reflected the good pasture conditions this year, which meant calves were held back from feed placement in August, coming onto feed in September instead. He also noted cheap feeder cattle prices and prospects for a large corn crop made putting light cattle on feed more attractive to feedlot operators.

Calves being placed now will come to market next April and May. Given current feeder cattle and feedgrain prices, there are prospects for making money on these cattle, said Ellis, particularly if feedlot owners lock in profits in advance, based on corn and fed cattle futures prices.

"If someone locked in the price of corn and fed cattle futures prices, we're seeing gross margins well over $150 per head," said Ellis.

To view Iowa State University cattle margin projections, click here. 

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