Feedlot inventories are declining. Not that I needed the May 1 Cattle on Feed report to confirm what I expected or knew, but the report indicated a 1% year-over-year on-feed inventory drop with April placements down 6% and April marketings of finished cattle posting a 10% year-over-year increase. My goal in this commentary goes beyond simply reporting about the most recent cattle-on-feed statistics from the USDA report and once again make the case for what I believe would be positive changes in USDA cattle surveys.
I recently noted I don’t have an issue with USDA’s decision to discontinue the Mid-Year Cattle Inventory. As I expected, I may be the lone voice with that opinion. However, my thoughts go beyond simply thinking that we can do without the Mid-Year Cattle Inventory and I bring this up again because it relates to the Cattle on Feed, too. As I noted, I believe the time, effort, and money spent would be much more valuable if it went toward enhancing the information generated in the cattle on feed report and this could start with discontinuing the monthly reports and instead releasing “beefed up” Feedlot Inventory reports on a quarterly basis. USDA discontinued its Quarterly Cattle on Feed Reports in about 1996. In my opinion, those reports were much more insightful regarding the flow of potential fed cattle numbers than the monthly reports.
The information gathered for the monthly reports can be unpredictable. It’s the nature of the beast. It is information gathered that is portraying a short-term state in the feedlot industry that is being used to anticipate short, medium, and longer market conditions based on expected performance of the cattle and the market. By reducing the release of these reports to a Quarterly basis, I believe the information would become more predictable with regard to the flow of finished cattle into the market. More importantly, the consistency of information will be greater, therefore reducing “market noise” and thus, volatility.
Managing risk across the beef industry supply chain is becoming increasingly critical and this requires timely, quality information concerning all aspects of supply and demand providing the foundation for solid analysis and projections. The end result is well-informed decision-making.
