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Cattle on Feed to have Little Effect on Futures

26 March 2012

US - USDA released on Friday its latest estimates of the number of cattle on feed as of March 1, 2012. The results from the monthly survey came in very close to pre-report estimates and will likely have limited impact on futures on Monday, writes Steve Meyer and Len Steiner.

Rather, we continue to think that markets will remain focused on the events surrounding LFTB and the possible impact on ground beef and beef demand going into the grilling season. Below is a brief recap from the latest feedlot survey (also see p.3): - Total cattle on feed on March 1 were estimated at 11.677 million head, about 2.6 per cent higher than a year ago. Pre-report estimates were looking for a 2.3 per cent increase in overall inventory but on a net level the USDA survey was only a few thousand head larger than analyst estimates.

On average analysts expected total placements to be up 2.7 per cent from the previous year. The USDA report pegged total placements in feedlots that had 1000 or more head on feed at 1.714 million head, 2.8 per cemt higher than a year ago.

The number of cattle marketed was estimated at 1.755 million head, two per cent lower than a year ago and smaller than pre-report estimates which were looking for a 0.5 per cent recline in marketings. Overall the feedlot inventory showed that we continue to have more cattle on feed but high breakevens on those cattle will continue to make feedlots reluctant in aggressively marketing cattle.

April will be critical for feedlots as retailers and foodservice operators get in gear for the start of the grilling season. It remains to be seen if all the negative stories about LFTB have any lasting impact on ground beef demand. Ground beef accounts for between 40-45 per cent of all beef consumed in the US. Cattle carcass weights are now record large for this time of year and on Friday USDA pegged cattle carcass weights at 792 pounds, about 23 pounds or three per cent higher than a year ago. The year over year increase in cattle weights in part reflects heavier cattle in feedlots but also more steers in the mix compared to last year.

Based on the USDA monthly statistics, February FI US cattle slaughter was 2.515 million head, 2.5 per cent lower than a year ago. And yet, total production for the month at 1.981 billion pounds was down just 0.6 per cent from a year ago.

FI Hog slaughter in February was 8.974 million head, 6.3 per cent higher than a year ago.

There was one more slaughter day than a year ago in February so that skews the year over year comparisons. Still, combined Jan – Feb pork slaughter is up almost 1 million head or 5.5 per cent from a year ago.

Pork production in February was 1.870 billion pounds, 6.5 per cent higher than a year ago. Higher slaughter numbers coupled with a slight increase in weights have pushed more pork to market, pressuring prices USDA announced on Friday that it was temporarily pulling the proposed rule on weekly pork export reporting due to procedural issues and it will re-file at a later date. Once filed, the 60 day comment period will begin anew.

TheCattleSite News Desk



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