July Cattle On Feed Recap

USDA released their monthly Cattle on Feed report this afternoon (July 20). The report shows 10.710 million head of cattle in feedlots with 1,000 head or larger capacity, an increase of 2.7% from the July 2011 number. This is largely in-line with pre-report expectations, which were looking for an increase of 2.5%. [A separate report revealed that cattle in feedlots of all sizes on July 1 was 12.3 million head. More on the mid-year cattle inventory report here.] Placements into feedlots during the month of June totaled 1.664 million head, down 1.8% from year ago levels. Analysts expected placements to drop 1.3% versus last year, so the report shows a less cattle were placed than expected. This could be viewed as mildly bullish, but with the drought conditions worsening across 80+% of the U.S. most expect the number of cattle in feedlots to grow as the year progresses which will dampen any positives this report highlights. Marketings were down 6.1% from a year ago at 1.965 million head. Pre-report expectations were looking for this number to be 6.0% lower.

Delving into the placements by weight and by state is quite a revealing. Nationally, placements of cattle under 600 pounds were even with one year ago, placements over 800 pounds were 13.6% higher than last year, and cattle placed between 600 and 800 pounds were were lower by 11.3%. Given the rise in corn prices that started in mid-June the increased placement of heavy cattle is not surprising. This national trend was similar in both Kansas and Texas, but in Nebraska all weight categories saw a jump in placements. Two things to keep in mind. First, the drought of 2011, to which this month’s report is being compared to, was dire in Texas and the southern portions of Kansas. Second, the dry conditions in the western Corn Belt are serious and appear to be forcing producers hand. It should be expected that this trend has continued and will likely show up again in next month’s report.

Summary of the report:

Pre-report Estimates:
(1,000 head) % of 2011 Average Range
Placed during Jun 1,664 98.2% 98.7% 92.6% 104.1%
Marketed during Jun 1,965 93.9% 94.0% 92.0% 101.0%
On Feed, Jul 1 10,710 102.7% 102.5% 100.0% 103.8%

Placements by weight group and state:

Weight Group Kansas Nebraska Texas US Total
<600 26.7% 40.0% -14.3% 0.0%
600-699 -15.8% 16.7% -23.1% -15.8%
700-799 -8.3% 28.6% -37.5% -7.1%
800+ 5.0% 19.2% 62.5% 13.6%

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