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CME: Inventory of COF in Feedlots Close to Analysts' Expectations

27 August 2019

US - The inventory of cattle on feed in feedlots with +1000 head capacity as of 1 August was estimated at 11.112 million head, 0.2 percent higher than a year ago. Analysts expected the total on feed number to be up 0.6 percent, according to Steiner Consulting Group, DLR Division, Inc.

A robust marketing pace during June and July has allowed producers to stay ahead of the larger on feed numbers that were available in early spring. On 1 March the total supply of cattle that had +120 days on feed was 7 percent higher than last year’s already quite high levels.

As of 1 August, the inventory of +120 day cattle was just 0.8 percent higher than a year ago and the inventory of +150 day cattle was 2.9 percent lower than last year.

Placements: While there was a wide range in published analyst estimates regarding placements, there was broad consensus that placements for the month would be lower than a year ago. The USDA survey pegged July placements at 1.705 million head, 2.1 percent lower than a year ago.

Analysts polled ahead of the report expected placements to be 0.5 percent lower. Lower feeder cattle sales during July, lower imports, higher corn prices and good pasture conditions were all seen as factors contributing to light placements for the month.

The 2.1 percent decline represents a reduction in placements of around 37,000 head. This follows a decline of 60,000 head in May and 42,000 head in June. The USDA survey continued to show a notable reduction in the number of light calves placed on feed.

Placements of calves under 600 pounds were down 50,000 head or 12 percent from a year ago and placements of calves between 600-699 pounds were down 30,000 head or 10 percent from last year. Fundamentally, processing capacity challenges this fall coupled with lower placements of light calves should continue to support wide spreads between Oct-Dec and Oct-Feb cattle.

Marketings: According to USDA feedlots marketed 2.002 million head of cattle in July, 6.9 percent more than a year ago. Analysts polled ahead of the USDA report also expected to see a 6.8 percent decline in marketings. There was one more marketing day in July, which affected the year/year comparison.

If we adjust for the calendar difference, daily marketings in July were 2.3 percent higher than a year ago. The marketing number was consistent with the reported fed cattle slaughter during the month of July.

According to USDA, daily fed cattle slaughter for the month was 7 percent higher than then previous year. The ratio of marketings in July vs. the supply of +90-day cattle was 33.2 percent, about a point higher than the previous month and also a full point higher than the five year average. The robust marketing rate has allowed producers to stay current so far, with fed cattle weights increasing in line with the normal seasonal trend for this time of year.

Below, we have included the regular summary of price and production numbers for last week. Despite the temporary closure of a major beef packing plant, total cattle slaughter for the week was 654,000 head, 1.8 percent higher than year ago.

We estimate that total fed cattle slaughter last week was 524,000 head, 2.8 percent higher than a year ago. The y/y increase in fed cattle slaughter and the completion of Labor Day retail purchases likely contributed to the decline in cutout values on Thursday and Friday.


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


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