Cattle on Feed Report: Slightly Price-Negative
The U.S. feedlot inventory at 10.813 million head as of Oct. 1 was 5.4% bigger than year-ago and 81,000 head more than the average pre-report trade estimate implied. The bigger-than-anticipated increase in feedlot supplies was driven by more aggressive placements than expected. September placements topped year-ago by 13.5%, which was bigger than all but two of the pre-report estimates. Marketings topped year-ago by 2.9%, but that wasn't enough to offset the major increase in placements.
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Cattle on Feed Report
|
USDA
|
Avg. Trade Estimate
|
Range
|
|
% of year-ago levels
|
|||
| On Feed |
105
|
104.6
|
103.4-106.2
|
| Placements |
113
|
108.0
|
103.4-116.0
|
| Marketings |
103
|
102.6
|
101.2-103.1
|
Placements were up in every weight category compared to year-ago. Lightweight (under 600 lbs.) placements rose 17.4%, 6-weights were up 13.3%, 7-weights were up 8.9%, 8-weights were up 17.0%, 9-weights were up 14.0% and heavyweight (1,000-plus lbs.) placements were up 4.5% from year-ago levels.
The increase in cattle placements over the last quarter has been largely driven by more heifers moving into feedlots. The number of heifers on feed as of Oct. 1 was up 13.0% from last year, while steer numbers are up only 1.6%. The active movement of heifers into feedlots suggests ranchers continue to contract their herds.
The report data is likely to provide light pressure on live cattle futures Monday, especially deferred contracts given the sharper-than-expected rise in placements. If cash cattle trade is active at mostly steady prices, as initial trade suggests, pressure on nearby contracts should be limited.
