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CME: Highlights of Cattle on Feed Report

22 February 2010

US - USDA released its monthly Cattle On Feed report on Friday afternoon, report Steve Meyer and Len Steiner.

The key numbers from the report as well as the results of Dow Jones’ pre-report survey of analysts appear on the table below.

USDA Cattle on Feed Report Summary - February 2010
  Thous. Hd. 2010 as Pct. of 2009
2009 2010 Actual Estimate* Difference
On Feed, 1 February 11,288 10,989 97.4 96.9 0.5
Placed on Feed in January 1,858 1,825 98.2 95.1 3.1
Fed Cattle Marketed, January 1,737 1,774 102.1 100.9 1.2
*DowJones Newswire

Some of the report's highlights are:

  • 1 February inventory of cattle on feed in feedlots with a capacity of 1000 head or more was 10.989 million head, 2.6 per cent fewer than one year ago and virtually unchanged from a revised 1 January inventory of 11.008 million head. The 1 February number was 0.5 per cent larger than the average of the pre-report estimates — close enough that we will not likely see a large price change on Monday’s Live Cattle Futures trade.

  • The number that was significantly different from expected was January placements numbering 1.825 million head, 98.2 per cent as many as one year ago. That is over 3 per cent more cattle placed last month than was expected by the surveyed analysts and a number that is a bit of a surprise given the very difficult weather conditions in many feeding areas. This figure could well be supportive of summer Live Cattle futures on Monday.
  • 1.774 million cattle were marketed in January, 2.1 per cent more than one year ago and just over 1 per cent more than was expected by analysts. As a point of reference, steer and heifer slaughter for the four weeks ending 30 January was 5.5 per cent higher than last year.

  • Placements by weight class were very, very similar to last year with the only significant difference being in the 600-699 pound category where 445,000 head were place this year versus 505,000 last year. The weighted average placement weight during January was 693.8 pounds, virtually identical to last year’s 694.3 pounds and only 1.5 pounds lower than the 2004-2008 average of 695.3 pounds. The similarity of those numbers simply suggests placement weights will not cause either the timing of marketings or market weights to differ much from historic norms. That doesn’t mean those two factors will not differ from history as there are a host of things that could still cause that to happen. But it doesn't’ appear that placement weights will be the reason for any variation.

The February report also includes estimates of the number and inventories of various sizes of cattle feedlots, including those with capacities of less than 1,000 head which are not included in other monthly reports. USDA estimates that there are 80,000 feedlots with inventories of less than 1,000 head and that they held 2.634 million head on 1 February. The number of small feedlots is the same as one year ago while their inventory is 0.5 per cent higher. USDA also estimates that the total capacity of US feedlots actually INCREASED last year, from 16.7 million to 16.8 million. Capacity utilization on 1 February was 82 per cent — down 1 per cent from last year. That low capacity utililsation rate suggests that further consolidation will occur in coming year. Profit margins are not likely to ever stay good for long with that much excess capacity.

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