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CME: Daily Average Cattle Marketings Above 5-Year Average

01 June 2017

US - We said that there would be more discussion of the latest "Cattle on Feed" report from USDA’s National Agricultural Statistics Service (NASS). Compared to most 1 May "Cattle on Feed", reports this one warrants additional attention, writes Steiner Consulting Group, DLR Division, Inc.

First we reinforce a point made that daily average cattle marketed by feedlots remained robust in April (as shown in the graphic below), especially when compared to a year ago. Daily average marketing’s have been above the 5-year average (2011-2015) since last October.

During the first four months of 2017, NASS reported head marketed at 6.5 per cent above 2016’s (up 431,000 head). Much of the increase in marketing’s so far this year has been due to a more normal feedlot animal turn-over rate compared to the slow pace in 2016. For the first four months of this year, compared to the prior 5-year average (2011-2015), cattle marketed increased by 1.3 per cent or about 88,000 head.

Fed cattle marketing’s have been underpinned by strong demand for beef, both domestic and foreign, which has kept packers searching for animals. Other factors also have encouraged cattle to be marketed, not the least of which has been the fed cattle basis (difference between cash and futures price). Our visits with bankers and cattle feeders indicate that many more cattle were hedged in recent months than in several years.

By historical standards, the number of animals placed into feedlots so far in 2017 has been large. Net placements is the head placed less other disappearance (other disappearance is largely death loss, animals moved from one feedlot to another, and sometimes some animals exit feedlots to pastures even though the NASS survey indicates only animals on “full feed for slaughter” are to be counted).

Net placements for the first four months of 2017 totaled 7.4 million head, which was up 9.1 per cent or 616,000 head year-over-year. Importantly, compared to the prior 5-year average (2011-2015) the number of animals placed in January-April was 11.2 per cent higher (up 764,000 head). In fact, head placed into US monthly reported feedlots during the first four months of this year was the largest since January-April of 2000.

Historically large placement’s have been driven by the improved economic environment of US cattle feeding cattle compared to the last two dismal years. Cattle feeding profits so far this year have been very positive. The Livestock Marketing Information Center estimated that slaughter steers sold in April had the highest profit for that month since they began estimates in 1975.

Large placements so far in 2017 will contribute to increasing fed cattle marketing’s beginning late this summer and pressure prices compared to current levels. In terms of the feeder cattle market, note that the year-over-year increase in the feeder cattle supply outside of feedlots that was estimated as of 1 January of this year has already been placed on-feed. Of course, the spring born US 2017 new crop of calves is now on the ground and will become available to feedlots and stocker operations this fall.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

TheCattleSite News Desk

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