March Cattle on Feed Report Recap

USDA released their monthly Cattle on Feed report this Friday afternoon (Mar 23). The report showed that 11.677 million head of cattle were in feedlots with 1,000 head capacity or larger on March 1 of this year. This is 2.6% above last year’s on feed number for the same point in time. Pre-report expectations looked for cattle on feed to be up 2.3%, so the reported value was mostly in line with this estimate. Placements into feedlots during February totaled 1.714 million head, up 2.8% from last year. Pre-report estimates pegged placements to be higher by 2.7%, so again the reported number is about spot on. Cattle marketed during February totaled 1.755 million head, down 2.0% from last year. The expectation was for marketing to be lower by 0.5%, so the reported number is likely to be viewed as bearish by most (especially given that it is below the lowest estimate of -1.8%).

The higher on feed number should not be too alarming. As has been mentioned here in the past, there were many lightweight cattle put on feed durring the latter part of 2011 and some of these are still lingering around. The higher placements, on the other hand does buck the trend of the past two reports which showed lighter placements compared to year ago levels. The lower move in the corn market along with steady to higher cattle prices throughout the month of February tilted the feeding profitability window into positive territory. This led to an increased incentive for feedlots to procure cattle since they could, for all intents and purposes, lock in a profit. As a result feeders were aggressive in locating cattle to place on feed and this shows up in this month’s report. The lack of available cattle in the U.S. led to an increase of feeder cattle imports from Mexico filling U.S. yards. Heavy cattle placements, those over 800 pounds, experienced the largest increase from year ago levels, which should not be a surprise since it was at this time in 2011 that the drought was really taking hold of the Southern Plains and light placements were growing.


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