CATTLE ON FEED REPORT TRENDS ARE A KEY: Source: www.aragriculture.org
Even with year-over-year increases in the number of cattle on-feed, trends in the USDA-NASS Cattle on Feed report numbers paint a more positive price picture. Trends within the report over a period of months and the context of those numbers are easily overlooked or underestimated, but are important. Of course, there have been very positive trends on the demand side of the cattle business, especially increasing beef exports which have also supported cattle prices. But, here we will focus on trends in cattle on-feed numbers since last summer and what the next several months are expected to look like.
First a quick review of the latest monthly Cattle on Feed report (released Friday November 19). The number of cattle in the monthly surveyed (greater than 1000 head one-time capacity) was 3.7% above a year ago as of November 1 and the largest for that date since 2006. During October, compared to a year ago, placements of animals into feedlots were down just less than 1% and marketings were up 3%.
Over the last five months feedlot placements have averaged 4% above a year ago, supported by drought. Feedlot marketings also have been above a year ago, posting a 5-month average increase of 3.2%. Reported U.S. feedlot marketings have been supported by reduced participation by farmer-feeders and significant reductions in fed cattle imports from Canada. Overall, the on-feed inventory has been bolstered, but year-over-year increases have been moderating since mid-summer. Nationwide, the reported number of cattle in 1000 head and larger capacity feedlots peaked as of August 1 at 7.2% above 2010’s. Since August 1, the on-feed inventory has been decreasing by just
over 1% each month. That trend is expected to continue, so likely during the first three months of 2012 the U.S. monthly number of cattle on-feed will drop below a year earlier.
Given the drought and the changing structure of the U.S. cattle feeding industry, interpreting monthly Cattle on Feed reports must be done by looking a the trends and causes. Trends within the Cattle on Feed reports point to evaporating year-on-year increases. With a declining cowherd, that trend will continue.
Source: Livestock Marketing Information Center (www.lmic.info),