In The Cattle Markets

US - A weekly review of the cattle market by Darrell R. Mark, Ph.D., Associate Professor, Department of Agricultural Economics, University of Nebraska–Lincoln
calendar icon 29 April 2010
clock icon 6 minute read

March Placements Lower Than Expected

USDA reported the smallest April 1 cattle on feed inventory in last Friday’s Cattle on Feed report since 2004. At 10.769 million head on feed on April 1, 2010, total inventory in 1,000+ head capacity feedyards was 3.5 per cent lower than last year and 5.8 per cent lower than the previous fiveyear average. It is also about 70,000 head less than what the trade expected prior to the report’s release.

The April 1, 2010 cattle on feed inventory shrank as a result of both steady marketings and lower placements. March marketings were 1.902 million head, 4.3 per cent higher than March 2009. However, March 2010 had one additional marketing day, so average daily marketings were nearly steady last month. The marketing pace relative to the size of the on feed inventory continues to be relatively good and suggests the fed cattle market is relatively current. Marketings as a percentage of the on feed inventory was 17.5 per cent in March, that was the highest level since September 2009 and 1.3 percentage points above March 2009.

Relative currentness of the cattle on feed inventory is also noted by a 6.3 per cent drop in the number of cattle on feed for more than 120 days on April 1, 2010, compared to last year. While the trend towards placing heavier yearlings on feed has necessarily dropped the size of that category, it has been evident in the data for more than a year, making the year-to-year comparison relevant.

March placements were the most anticipated number in last Friday’s report, and pre-release estimates ranged widely from a 4.3 per cent increase to an 11.0 per cent increase. At 1.857 million head, gross placements were up only 2.7 per cent from March 2009. Net placements (gross placements less other disappearance) were up only 2.2 per cent due to a 10,000 head increase in other disappearance in March 2010 relative to last year (note, however, it was the second lowest other disappearance in the current series that began in 1996). Unlike the trend in recent months, the increase in placements was driven by larger-than-year-ago placements of lightweight calves and a decrease in heavier placements.

Placements of calves less than 600 lbs were up 29.5 per cent, 600-699 lb placements were up 10.3 per cent, and 700-799 lb placements were up 1.5 per cent. Placements of cattle weighing more than 800 lbs were down 14.9 per cent. Not only does this placement pattern suggest that the fed cattle market should stay relatively current in the near-term due to the drop in yearling placements, but the increase in placements being lower than expected should lend support to the third quarter fed cattle market.

Of the major cattle feeding states, Kansas and Colorado led the country in percentage increases in March placements relative to last year (each up about 12 per cent). However, the general trend towards more cattle on feed in the northern plains versus the southern plains, due to cost of gain differences, is still evident in the placements and on feed data. The combined placements of cattle in Nebraska, Iowa, and South Dakota from October through June (measuring the placement of the calf crop that is typically weaned in October/November than placed on feed sometime during the next nine months) has steadily been increasing for the last ten years.

For the current year (October 2009 through March 2010), 30.0 per cent of the calf crop was placed in feedyards in these northern states during one of the worst winters in history. This was up from 27.7 per cent the previous year and 23.5 per cent in October 2000 to June 2001. The combined total of cattle placed in Texas, Oklahoma, and Kansas from October through June fell below 50 per cent in the current year (at 49.7 per cent) for the first time in at least ten years. With this being the trend for the past several months, the cattle on feed number in Iowa has grown substantially (up 13.2 per cent compared to April 1, 2009). South Dakota also has an on feed inventory 4.4 per cent higher than last year and Nebraska’s declined only one per cent. While Oklahoma saw three per cent growth in on feed numbers and Kansas declined less than two per cent, Texas, the largest cattle feeding state, saw a six per cent drop in total on feed numbers.

The Markets

Last week’s fed cattle market took a bit of a breather from its recent sharp increases, with live prices about steady and dressed prices about $1/cwt higher than the previous week. The 5- Area steer price at $99.32/cwt (live) and $160.33/cwt (dressed) is about 13 per cent higher than cattle prices last year at this time.

Not only ha s reduced beef production from lower carcase weights helped drive prices higher in recent weeks, but a rally in the boxed beef market has also strengthened prices. For the week, Choice boxed beef averaged $167.81/cwt, up $1/cwt from the previous week and about 10 per cent higher than last year. Nationally, feeder cattle markets last week were somewhat mixed.

Prices for both 5-weight and 7-weight feeder cattle were $1-2 higher in Nebraska last week, while Oklahoma prices were steady to $3/cwt lower. Montana saw calf prices slightly higher and yearling prices more than $3/cwt lower. The corn market through Thursday was steady last week in Omaha, after significant increases and decreases throughout the week. Dried distillers grain prices were about $2/ton higher in Nebraska last week, while wet distillers grain was steady. On April 26, 2010, CME Group began trading its new DDG futures contract. Live prices are available at

Cattle or Meat Category

Data Source: USDA]AMS Market News
Week of
Week of
Week of
5-Area Fed Steer all grades, live weight, $/cwt $99.32 $99.53 $87.89
all grades, dressed weight, $/cwt $160.33 $159.24 $142.24
Boxed Beef Choice Price, 600-900 lb., $/cwt $167.81 $166.77 $152.83
Choice-Select Spread, $/cwt $2.61 $2.46 $2.17
700-800 lb. Feeder Steer Price Montana 3-market average, $/cwt $109.20 $112.49 $101.96
Nebraska 7-market average, $/cwt $118.45 $116.76 $102.05
Oklahoma 8-market average, $/cwt $112.72 $113.05 $101.08
500-600 lb. Feeder Steer Price Montana 3-market average, $/cwt $131.95 $131.22 $115.82
Nebraska 7-market average, $/cwt $132.86 $131.19 $120.42
Oklahoma 8-market average, $/cwt $128.49 $131.22 $116.76
Feed Grains Corn, Omaha, NE, $/bu (Thursday) $3.53 $3.52 $3.75
DDGS Price, Nebraska, $/ton $100.10 $98.10 $129.50
WDGS Price, Nebraska, $/ton $36.50 $36.50 $48.63

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