Cattle on Feed Report: Placements Well Above Expectations

January 27, 2017 02:32 PM

USDA's Cattle on Feed Report placed the Jan. 1 feedlot inventory at 10.605 million head, 135,000 head more than the average pre-report estimate implied and 30,000 head more than year-ago. The bigger feedlot supplies came via a much-stronger-than-expected placements figure during December. Feedlots placed 140,000 head more calves on feed last month than anticipated. December marketings were virtually in line with expectations.

Cattle on Feed
USDA
Avg. Trade Guess
Range
 
% of year-ago levels
On Feed
100
99.0
98.4-100.0
Placements
118
108.4
103.5-113.6
Marketings
107
106.7
104.8-109.2


Placements of all weight categories were up from year-ago. However, the biggest increases relative to December 2015 placements were in the lighter categories, which is a change from the general pattern of feedlots wanting to reduce the time calves are on feed. Lightweight placements (under 600 lbs.) rose 16.0%, 6-weights were up 26.8%, 7-weights were up 26.1% and heayweight placements (800-plus lbs.) were up 4.5% from year-earlier levels.

This report also featured USDA's quarterly breakdown of steers and heifers in feedlots. The number of steers on feed as of Jan. 1 at 7.022 million head is up 3.0% from October, but 2.0% lower than last year. The more telling figure is the number of heifers on feed, which at 3.583 million head, is up 4.2% from October and 5.0% greater than last year. This is the third straight quarter heifer numbers on feed that has been up from the prior year, giving further proof the herd rebuilding phase has ended. Next Tuesday's Cattle Inventory Report is expected to give us more proof of that.

The report data is negative compared to pre-report expectations, especially for deferred live cattle futures given the huge jump in placements. If cattle futures are pressured by the data, it would give further indications that a short-term top is in place.