USDA Issues August
Cattle on Feed Report
July placements, marketings down compared to last year.
USDA's monthly Cattle-on-Feed report for August, released Friday afternoon, Aug. 17, showed the number of cattle in feedlots with capacities of 1,000 head and more almost precisely as was expected, on average, by analysts surveyed before the report's release.
Some highlights are:
- Total cattle on feed as of Aug. 1 numbered 10.656 million head, 0.7% higher than one year ago. That year-on-year increase is exactly the same as the average of pre-report estimates. The figure is 7.9% larger than was the inventory on Aug. 1, 2010.
- The "on the nose" feedlot inventory number was reached in a slightly roundabout manner, with both placements and marketings coming in lower than what analysts, again on average, expected to see in the August report. 1.922 million cattle were placed during July, 10% lower than one year ago and 1.4% lower than the number expected. Recall that last year's July placements were huge due to the early movement of calves from parched pastures in the Southwest. There are plenty of parched pastures to go around this year, but not near as many cattle were placed. It appears that the winner in our "feed prices vs. pasture conditions" battle is feed prices, whose high level very likely kept a good number of cattle out of lots — for now. July placements were 8.5% larger than the 2006-2010 average, indicating that, while smaller than last year, this year's movement of cattle to feedlots was still quite large.
- Marketings of 1.913 million head were only fractionally lower than last year, but were 1.9% lower than analysts expectation of +1.6% for this year's sales. Both numbers were significantly higher relative to one year ago than was steer and heifer slaughter over the four weeks that ended July 28. That figure was -3.1%.
- The lack — at least for now — of early-placed cattle is apparent in the average in-weights of July-placed cattle. Those cattle weighed an average of 713.7 pounds (lb.), just 1 lb. higher than the 2006-2010 average for July, but 11.5 lb. heavier than last year's July-placed cattle. The lower August placements and "normal" placement weights are slightly bullish for January and February fed-cattle prices.
- The impact of pasture conditions can be most clearly seen in the state-by-state placement data. Placements in Oklahoma and Texas were 21% and 25%, respectively, lower than one year ago. Those declines account for 243,000 of the 471,000 fewer cattle placed this July. Part of this reduction is due to the simple fact that there are fewer cattle in those states this year, but part of it is due to relatively better pasture conditions in much of Texas and a smaller proportion of Oklahoma. Conversely, placements in Nebraska were 5% higher this year, while placements in Iowa, Kansas and South Dakota were 95%, 93% and 91% as large as last year — smaller, but still above the national year-on-year figure, meaning they drove the national number higher.
We expect cattle placements to remain lower than one year ago for the remainder of 2012. That is not saying a lot since placements last year were so large, but tighter feeder-cattle supplies and record-high feed prices will both discourage any growth in feedlot numbers. We still expect feedlot inventories to fall below year-ago levels in September and for beef cutout values and cattle prices to move higher this fall. The Choice cutout gained almost $9 last week.
Editor's Note: The Daily Livestock Report is published by Steve Meyer and Len Steiner. To subscribe, visit www.dailylivestockreport.com.
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