CME: Cattle on Feed Report Indicated Bullish Outlook as Placements are Down27 March 2013
US - The Cattle on Feed report has confirmed industry expectations by showing a 13.5 per cent reduction placements. Scott Meyer and Len Steiner link low placements with weakening fed-cattle values and demand.
USDA’s monthly Cattle On Feed report, released on Friday, will likely be viewed as bullish by the trade this morning primarily due to a larger-than expected decline in February placements. The key national data from the report appear at below.
February placements into feedlots with capacities of 1000 head and more numbered 1.482 million head, 13.5 per cent fewer than one year ago and nearly 78,000 head fewer than was expected, on average, by the analysts surveyed before the report by Dow Jones.
The other key measures are quite close to the average pre-report estimates. Weakening fed cattle futures and concern about the status of meat demand in general and beef demand in particular certainly reduced the incentives to place cattle last month.
The total March 1 feedlot inventory of 10.857 million head, however, represents the largest year-on-year decline yet seen in this cycle that began back in September.
The –7 per cent figure for March 1 inventory is also the largest year-on-year percentage decline since January 2009 and further solidifies our position that fed cattle supplies will tighten significantly in the second half or 2013.
As can be seen at right, the March 1, 2013 inventory was almost the smallest March 1 inventory of the past 6 years, exceeding only the 2010 inventory of 10.849 million head.
The average weight of cattle placed in February was 714.2 pounds, nearly 9 pounds of 1.3 per cent lower than one year ago. That average in-weight was tied for the third lowest for February in the current
Cattle-On-Feed data series that dates back to 1996.
Over time, February has marked the peak for placement weights during the year.
The 2007-2011 average for February is 722.5 pounds.
You can view the full Cattle on Feed report by clicking here.
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