TheBeefSite.com - news, features, articles and disease information for the beef industry

News

CME: Feedlot Placements Trending Towards Lighter Weights

23 February 2016

US - The February Cattle on Feed report was released by USDA-NASS on Friday, and numbers came in mostly as expected, write CME analysts Steve Meyer and Len Steiner.

Cattle placed in January totalled just 0.6 per cent below year ago numbers.

Within placement weight categories, the only weight category that experienced a year-over-year decrease was the group under 600 pounds.

In the 600-699 pound range placements were up 25,000 head, the 700-799 category was up 20,000 head, and the 800 + pound category was up 25,000 head.

This is a definite shift in the placement trend we have seen the past several months, which focused largely on placing heavy weight cattle.

We expect to see relatively more placements in the lighter weight categories in the coming months due to the larger year-over-year supply of feeder cattle outside of feedlots, along with improving profits of cattle feeders.

However, heavy weight placements continue to be the largest group by far and we believe that is a trend that will continue.

The majority of the increase in placements year-over-year came from Arizona, Colorado and Idaho, although these are not the largest cattle feeding states.

Kansas placements increased 5,000 head year-over-year, and Nebraska and Texas placements were both down slightly compared to year ago. January marketings came in at 97.8 per cent of 2015’s.

The average daily marketing rate in 2016 was 3 per cent higher than 2015 however. That is, adjusting for the difference in slaughter days, based on the daily average marketing rate, just over 2000 more head of cattle per day were processed in January 2016 compared to 2015.

These numbers put February 1 cattle on feed inventory, in feedlots with 1000+ head, at just under 100 per cent of 2015’s.

We started the year off with a larger supply of feeder cattle available outside of feedlots (larger by about 1 million head), compared to 2015. We have seen placements below year ago levels since July of 2015, and this January makes for the 7th consecutive month.

These facts combine to support that we are in a transition phase, going from placements below year ago levels to placements above year ago levels.

Of course if there is a large shift in market fundamentals such as a short corn crop, these expected dynamics will change.

The February cattle on feed report also contained revised numbers for 2015, along with the number of feedlots, inventory, and marketings by size of feedlot for 2015.

The numbers for 2015 confirm what the January Cattle Inventory report inferred, that there are more cattle in smaller (under 1000 head) farmer feedlots.

This shift came about due to lower corn prices and high fed cattle prices during 2014 and the first half of 2015.

Inventory of cattle on feed in feedlots under 1000 head was up 8 per cent or up 203,000 head. Inventory of cattle on feed in feedlots with 1000+ head was down 0.5 per cent or down 51,000 head.

These numbers were both as of January 1, 2016 and combined to a total cattle on feed inventory that was 101.2 per cent above January 2015.

Switching gears, monthly retail prices were published by USDA-ERS on Friday as well. Generally, protein prices continued to decline at the retail level.

All Fresh beef prices were down $0.23 per pound compared to January 2015. This price decrease could have good timing for the beef and cattle industry headed into spring, with seasonally increasing beef demand coupled and a relatively larger supply of cattle compared to a year ago.


Daily Livestock Report - Copyright © 2008 CME. All rights reserved.


TheCattleSite News Desk

Our Sponsors

Partners


Seasonal Picks

Animal Welfare in EPS - 5m Books