The United States Department of Agriculture (USDA) released its monthly cattle on feed report Friday.
The trend indicates a larger placement of cattle in feedlots and a growing number of cattle being fed.
The cattle market has seen a lot of volatility as herd size has grown over the past 2 years. The feedlot is the final confirmation of those numbers.
Analysts were expecting a drop in August placements, but they were wrong. The number of placements grew higher. Marketings were strong, so the overall balance of the report was not a surprise to Derrell Peel, Oklahoma State University livestock economist. Ron Hays, of the Rural Oklahoma Radio Network, interviewed Peel Friday.
?This report was pretty well anticipated ? not a big surprise to me. I don?t know how the trade will react,? Peel said. ?The placements came in a little bit higher than the average guess, but they weren?t really outside the range.?
Peel said cattle futures have seen a nice run-up lately, and believes the numbers in this report could give the market an excuse to apply pullback.
Cattle placements were up at 102.6 percent over last year, marketings at 105.9 percent over last year and total cattle on feed right was on target at 103.6 percent – a figure just slightly lower from last month?s 104.3 percent
?This marketings number was good. It was bigger than placement on a percent increase basis, so it did pull the on feed total down, while also crediting feedlots with managing to stay fairly current as they prepare to come off of the summer lows,? Peel said. ?There?s been some indication, in the last week or two, that feedlots have been kind of bowing up a little bit to get past these summer lows – they may be holding these cattle a little longer. Carcass weights are certainly going up seasonally, but they are still below year-ago levels.?
As long as the pipeline keeps from getting backed up, Peel said he believes he?s seen the industry do a good job handling its aggressive marketing rate for several months now.
Looking at the balance of the year, though, Peel expects to see some seasonal improvement in fed cattle prices as we finish out the year. He says that is predicated on boxed beef as well. Peel also predicts the price of feeder cattle to drop, but argues it may not drop very much, given the strong demand for stocker cattle.
