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CME: Analysts Predict Cattle Placements

20 May 2016

US - The May Cattle on Feed report will be published today by USDA’s National Agricultural Statistics Service, write Steve Meyer and Len Steiner.

The table below, published by Urner Barry, shows analysts’ pre-report estimates regarding May 1 inventory, April marketings, and April placements.

April of 2016 had one less slaughter day compared to April of 2015. This tends to decrease marketings about 5 per cent year-over-year. In terms of marketings estimates it appears marketings could have a daily rate that is notably above year ago levels.

This is not surprising as we slaughtered almost 2 per cent more (up 34,000 head) steers and heifers this April compared to last year, even with one less slaughter day. This increased rate of marketings pulled down the inventory of cattle on feed over 120 days in March, and we expect that trend to have continued in April especially since steer weights have continued to drop seasonally.

On the placement side, one of the most notable aspects is the tight range. Usually, and especially true lately, this range has been much larger.

Factors influencing these placements include: wheat pasture grazing, spring and summer grazing programs, and cattle feeding margins (ie: feeder cattle and fed cattle prices).

Reviewing placements in 2016 so far, through the first quarter placements were up 4.5 per cent or up 232,000 head compared to 2015. These year-over-year placement increases happened in February (up 10 per cent) and March (up 4.5 per cent).

One reason for expected lower placements in April is the thought that the industry is taking a breather from the high number of placements during the first quarter.

If we look at reasons for the increased placements so far this year, they include; a larger supply of feeder cattle available, relatively improved cattle feeding conditions, and a higher marketing rate of fed cattle.

Looking ahead, this high marketing rate could hint at increased placements in April/May, and coming months, to fill now empty bunk space.

There have been some preliminary data regarding regional placements that indicate we could be surprised (on the upside) with April’s placement number—especially in the Southern Plains.

Assuming placements come within the range of industry analyst expectations, we are looking at a cattle on feed inventory as of May 1 between 100.7 per cent and 103.0 per cent of 2015’s.

If placements are significantly higher than expected, this could move the inventory up year-over-year but probably not drastically as April is not a large placement month.

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