Cattle on Feed Report: Placements Higher Than Expected

Feedlots placed significantly more cattle on feed than expected last month, which pushed the Sept. 1 feedlot inventory higher than anticipated. August placements topped year-ago by 2.6%, whereas traders expected a 2.9% decline. As a result, the Sept. 1 feedlot inventory came in 95,000 head higher than anticipated and up 3.6% from last year. August marketings were basically in line with expectations.

The higher-than-expected placements were likely driven by drought in the Northern Plains forcing animals off pastures and a reduced number of heifers being retained for breeding.

The increase in August placements came in the 800 lb. and 900 lb. categories, which comprised roughly 39.2% of all animals placed on feed last month. While 8-weight and 9-weight placements were up 11.5% and 10.2% from year-ago, respectively, all other categories were steady to lower than last year. Lightweight placements (under 600 lbs.) were steady, 6-weights were down 1.7%, 7-weights down 2.6% and heavyweight (over 1,000 lbs.) down 8.3% from year-earlier levels.

This report data is likely to pressure live cattle futures Monday, especially since they rallied into the weekend. But attention in nearby futures should quickly return to cash fundamentals, as traders will see if the cash market can build on this week's price gains.