Cattle On Feed Higher than Thought

Cattle On Feed Higher than Thought Friday’s Cattle on Feed report fit the trend everyone expected, but higher placements than anticipated by some are being viewed as bearish.

Specifically, placements came in at 112.5% compared to last year (1.7 million head). On-feed inventory Aug. 1 is 2% less than a year ago (9.6 million head), and July marketings were 5% below a year ago (1.9 million head). Friday’s report was the 16th consecutive one that had monthly on-feed numbers lower than the prior year. Yet, marketings and on-feed numbers were also regarded as bearish compared to pre-report estimates.

Fed cattle gained $1-$1.50 by the end of the day Friday – $83.50 in the Southern Plains. Compared to the previous week, live sales in Nebraska sold $0.50 to $1.00 higher at $82.50-$83.00; dressed sales were $1 higher at $131. Compared to Thursday, Friday sales in Iowa and Minnesota sold steady to $0.50 higher at $82-$83; dressed sales sold steady at $130-$131.

“Cattle feeders have lost much of their drive, nerve, equity and banker’s confidence over the last year or so and can’t get excited about pushing the market for feedlot bound cattle,” say analysts with the Agricultural Marketing Service (AMS). “Feedlot closeouts have mostly been losers and most profit hopes have come up empty as the stubborn fed cattle market has yet to respond to tight cattle supply data.”

With that in mind, calves and stocker cattle traded fully steady, while feeder steers and heifers were called steady to $2 lower last week.

“Despite cheaper grain markets and subsequent feed costs, demand is currently stronger for grazing cattle to take advantage of the unusually adequate late summer pasture forage across much of the Plains and the Midwest,” say AMS analysts. “Backgrounding cattle has been much more profitable of late than feeding operations, and longtime weaned yearlings should be a hot commodity late this fall when offerings are dominated by bawling calves.”

Given the increased potential for wheat pasture this fall, calves could see a bounce as well (see article “Cattle Prices To Increase”).

The summary below reflects the week ended Aug. 21 for Medium and Large 1 – 500- to 550-lb., 600- to 650-lb. (calves), and 700- to 750-lb. feeder heifers and steers (unless otherwise noted). The list is arranged in descending order by auction volume and represents sales reported in the weekly USDA National Feeder and Stocker Cattle Summary: