Source: Rita Jane Gabbett, MEATINGPLACE, 9/21/15


While USDA’s latest Cattle on Feed report on Friday showed fewer cattle placed on feed than anticipated, the total cattle supply was up from a year ago. This, in addition to heavier cattle left on feed longer coming to market just as the summer grilling season ends, could portend weaker cattle and beef prices ahead, according to analysts.

Cattle on Feed
USDA reported cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 9.99 million head on Sept. 1, 2015. The inventory was 3 percent above that of a year ago.

Placements in feedlots during August totaled 1.63 million head, 5 percent below 2014. Net placements were 1.57 million head. During August, placements of cattle and calves weighing less than 600 pounds were 395,000 head, 600-699 pounds were 215,000 head, 700-799 pounds were 362,000 head, and 800 pounds and greater were 660,000 head. Placements are the lowest for August since the series began in 1996.

Fed cattle marketings during August totaled 1.59 million head, 6 percent below the same period in 2014. Marketings are the lowest for August since the series began in 1996.

Other disappearance totaled 60,000 head during August, which was 9 percent below 2014.

Analysis
Oklahoma State University Extension Livestock Marketing Specialist Derrell Peel called the large cattle inventory “a predicament” that will continue to drag on fed cattle markets.

“The placement total was below pre-report estimates and may provide a bit of short-term boost to markets. However, lower placements are not providing much help for fed cattle markets. ... What has been a 'situation' for several months is rapidly turning into a 'predicament,'” Peel wrote in a report analysis in the Cow/Calf Corner newsletter.

Cattle futures prices rose by about a dollar per hundredweight in morning trade on the Chicago Mercantile Exchange, though analysts expect that price rise to be short lived.  

Analysts in the Daily Livestock Report noted the number of cattle that have been on feed for more than 120 days was up 18 percent from a year ago and also up dramatically compared to the 5-year average. Meanwhile, a decline in cattle prices has induced packers to increase slaughter.

“Increasing slaughter at this time of year is problematic, however, as beef demand in September, especially ground beef demand, is not that great,” the DLR analysts noted. “Placements of cattle were light but the imperative for feedlots is to become more current. In the short term this implies relatively weak cattle and beef prices, at least until stronger demand kicks in.”

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