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Latest cattle on feed report shows industry doing a good job managing growing cattle supplies

Profit Matters 4-25-17

On Friday of last week, the United States Department of Agriculture released its latest cattle on feed report.

According to the report, placements in the overall cattle inventory seem to be higher than most would have expected.

The resulting implications of this, however, seem to be somewhat moderated when compared to the reported marketing’s. OSU’s Dr. Derrell Peel gives his reaction to the numbers crunched by USDA.

“The April USDA Cattle on Feed report showed an on-feed inventory fractionally higher than one year ago at 10.9 million head for feedlots over one thousand head capacity,” Peel wrote in his analysis of the report. “Placements were larger than expected at 111 percent of last year and were, in fact the largest March placements in the current data series back to 1996.”

Peel contends that placements often receive the most attention in these monthly reports and may cause some bearish reaction. He says too, that the general idea that placements will grow should not be a surprise, while placements, along with the placement weight breakdown, provide more specific indications of the timing of fed cattle marketing’s and slaughter in coming months.

For that matter, March marketing’s were 110 percent of last year. Monthly feedlot marketing’s often receive little attention, Peel says, being viewed mostly as history by the time the report is released. However, strong marketing’s since mid-2016 have contributed greatly to the strength of fed cattle markets so far in 2017.

“The cattle industry in general and feedlots in particular have done a good job managing growing cattle supplies for most of the last year,” Peel writes. “If this continues, the industry can do much to minimize the supply pressure coming to bear on cattle markets in the coming months. Given the reality of growing beef production, the bigger key for the foreseeable future is continued strong domestic and export beef demand.”