November Cattle on Feed Report Summary


USDA’s National Agricultural Statistics Service released their monthly Cattle on Feed report Friday (Nov 22). The report revealed that 10.607 million head of cattle were in feedlots with a capacity of 1,000 head or more on November 1, 2013. This is a 5.7% decline from the same time last year and a 6.5% decline from the average over 2008 to 2012. Market analysts were expecting a 6.0% drop, so the reported value was very much in-line with this expectation. This marks the second lowest on feed number since the current version of this data series began in 1996 (with 1996 being the lowest).

Placements during October registered 2.394 million head, up 9.8% from last year but 1.0% lower than the five-year average from 2008-2012. Pre-report expectations called for a 8.7% increase and therefore the reported number is a tad on the high side, but the range of expectations was quite wide. This too is the second lowest reported value, with last year’s 2.180 million head being the smallest October placement number. So, from a big picture standpoint, inventories remain small. However, lightweight placements did jump in October. While this is common for October placements, the increase appears to be a bit more pronounced than in previous years. For example, placements of cattle under 600 pounds was up 5.9% (the smaller year over year percentage increase) but totaled 720,000 head (the largest of the four weight groups). Cheaper corn during the month of October is the most likely culprit and this could lead to even smaller placements in the future.

Marketings during October totaled 1.856 million head, up 1.0% from last year and up 4.0% compared to the average from 2008 to 2012. This is the fifth largest October marketings in the 18 year history of the data. This quite possibly cleared out some of the inventory that was carried over from the previous month’s fairly dismal marketing number (September was the third lowest marketings on record).

In summary, the higher than expected placements number will most likely lead to a bear market to start the week. Current trading is on shaky ground with falling beef prices and stagnated cash markets. Futures are currently at a premium to cash and the market will be looking for any ammunition to knock that premium down. In the longer term, the push of lightweight placements could put a strain on the markets (for the next six months or so) but, as I’ve noted so many times before, this will only further tighten supplies beyond that time frame since cattle will be market ready sooner when on feed than when on grass.

Report Recap:

        Pre-report Estimates:
 

(1,000 head)

vs. 2012

vs. 5-Yr Avg

Average

Range

Placed in Oct

2,394

9.8%

-1.0%

8.7%

-0.9%

18.1%
Marketed in Oct

1,856

1.0%

4.0%

1.4%

-0.4%

3.2%
On Feed, Nov 1

10,607

-5.7%

-6.5%

-6.0%

-8.0%

-4.5%

Placements by State & Weight Group:

 

AZ

CA

CO

ID

IA

KS

NE

< 600 lbs.

N/A

N/A

23.1%

N/A

N/A

12.5%

-10.5%

600-699 lbs.

N/A

N/A

11.1%

N/A

N/A

26.3%

30.8%

700-799 lbs.

N/A

N/A

28.6%

N/A

N/A

16.7%

12.5%

800+ lbs.

N/A

N/A

10.0%

N/A

N/A

41.2%

5.3%

TOTAL

47.4%

-1.6%

17.9%

1.8%

-12.3%

23.7%

6.8%

               
 

OK

SD

TX

WA

Other [1]

U.S.

 
< 600 lbs.

N/A

N/A

15.2%

N/A

5.6%

5.9%

 
600-699 lbs.

N/A

N/A

0.0%

N/A

8.2%

15.6%

 
700-799 lbs.

N/A

N/A

50.0%

N/A

-15.0%

17.2%

 
800+ lbs.

N/A

N/A

8.3%

N/A

-20.0%

3.6%

 
TOTAL

0.0%

-16.9%

17.8%

-20.3%

6.8%

9.8%

 
[1] Individual weight categories include states that are N/A
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