USDA released their monthly Cattle on Feed report this afternoon (Friday, March 22). At first glance, the number of cattle placed into feedlots with capacity over 1,000 head was much lower than expected (and just inside the lower bound range of expectations). Marketings were a tad higher that expected but within the range of expectations. The lower placement number left the number of cattle in feedlots on March 1 below expectations (and inside the low end of the range).
February placements of cattle into feedlots of 1,000 head capacity or greater totaled 1.482 million head. This was 13.5% below the number placed in February 2012 and 12.4% lower than the average number of February placements from 2008 to 2012. Pre-report expectations called for the drop to be around 9.0% with a range from -13.7% to -3.7% (when compared to one year ago). Thus the actual drop of 13.5% was just inside the lowest expectation. The drop in placements was fairly consistent across all states, with South Dakota and Washington reporting the only increases (but these two states only represent 5% of total placements for last month). Middle weight placements dropped the most, 600-699 and 700-799 pound placements were respectively down 19.4% and 13.2% from last year, while placements under 600 pounds and over 800 pounds were down 11.3% and 11.8% from 2012, respectively. This trend was mostly consistent in the larger reporting states as well, with the exception of Texas where light placements were down hard.
Marketings were lower this past month as well, with total marketings at 1.638 million head. This was 6.7% and 6.1% below February 2012 marketings and the February average from 2008 to 2012, respectively. Analyst had expected marketings to fall 7.3%, so the reported number was slightly higher than this expectation.
As a result of the larger drop in placements when compared to a slightly higher than expected marketings number, the total number of cattle in feedlots March 1 were lower than expected at 10.857 million head. This represents a drop of 7.0% and 4.8% compared to March 1, 2012 and the March 1 average from 2008-2012, respectively. Pre-report expectations called for the number to be 10.92 million head, or a drop of 6.5%. The range of expectations were from -7.1% to -5.4%, so the actual drop of 7.0% is just inside the range.
Given that placements and cattle on feed were just inside the lowest pre-report expectation markets should react favorably to the report when they re-open. Prices have been struggling of late due to higher slaughter weights (which typically equates to more pounds of beef) and undesirable Spring grilling weather (which is just one of numerous negative impacts on beef demand). This bullish report could provide a necessary shot in the arm to cattle prices as the market switches gears toward Spring highs and Summer lows.
Summary of the March 2013 Cattle on Feed report —
|(1,000 head)||vs. 2011||vs. 5-Yr Avg||Average||Range|
|Placed in Feb||1,482||-13.5%||-12.4%||-9.0%||-13.7%||–||-3.7%|
|Marketed in Feb||1,638||-6.7%||-6.1%||-7.3%||-8.8%||–||-4.0%|
|On Feed, Mar 1||10,857||-7.0%||-4.8%||-6.5%||-7.1%||–||-5.4%|
Summary of placements by state —
|< 600 lbs.||N/A||N/A||0.0%||N/A||N/A||-14.3%||0.0%|
|< 600 lbs.||N/A||N/A||-20.7%||N/A||-5.3%||-11.3%|
| Individual weight categories include states that are N/A|