Another bearish placements figure

USDA estimated the May 1 large feedlot (1,000-plus head) inventory at just shy of 12 million head, up 236,000 head (2.0%) from year-ago and 90,000 head more than the average pre-report estimate implied. The bigger feedlot inventory was due to placements again topping expectations. While April placements declined 0.9% from year-ago, they topped the upper end of pre-report estimates for a second straight month. Marketings fell 2.2% from year-ago in April, just fractionally less than the average trade estimate.  

Placements declined 5,000 head in Kansas, 15,000 head in Texas and 16,000 head in “other states” compared with year-ago. But Nebraska and Colorado feedlots placed an additional 15,000 head and 5,000 head on feed, respectively, versus year-ago in April. By weight category, placements declined 6.6% for lightweights (under 600 lbs.), increased 8% for 6-weights, fell 1.2% for 7-weights, rose 0.8% for 8-weights, dropped 4.5% for 9-weights and were unchanged for heavyweights (1,000-plus lbs.).

The placements data is bearish compared to the average pre-report estimate, but traders took a lot of premium out of deferred live cattle futures ahead of the report. That should limit the market impact on Monday, though bears have momentum, so traders would need to fade the report to trigger a corrective rebound in futures.