Market News & Headlines >> Big January Feedlot Placements
Friday afternoon’s monthly USDA Cattle-on-Feed Report had a clearly negative look to it as it pegged the Feb. 1 feedlot inventory above the range of trade expectations on higher-than-expected January feedlot placements.
USDA pegged January placements of cattle on feed at 2.029 million head, or 108.6% of a year earlier, compared with trade estimates averaging 102.5% in a range from 95.7%-107.1%. January feedlot placements were the largest in eight years, and in terms of actual numbers, were 160,000 head larger than a year earlier.
The Feb. 1 supply of cattle on feed was put at 10.760 million head or 97.2% of a year earlier compared with trade estimates that averaged 95.9% in a range from 94.8%-97.0%. The feedlot inventory was 310,000 head smaller than a year earlier.
January marketings came out in the lower half of trade expectations at 94.5% of a year earlier. Pre-report estimates of marketings averaged 95.0% in a range from 93.2%-97.3% of a year earlier.
The report confirms that record fed cattle prices combined with the lowest corn prices in several years were a strong incentive to place cattle on feed last month. Significant increases in placements in California, Idaho and Washington also indicate the severe West Coast/Pacific Northwest drought was also a factor in the large placements.
The report will likely weigh on summer and fall month futures on Monday, but those contracts’ wide seasonal discount to cash should limit any negative reaction. Strong Friday afternoon cash trade amid Indications market-ready cattle supplies remain tight should limit weakness in February and April futures.