The United States Department of Agriculture’s National Agricultural Statistics Service (USDA, NASS) released their monthly Cattle on Feed report Friday afternoon (Mar 21). The report revealed that 10.790 million head of cattle were in U.S. feedlots with a capacity of 1,000 head or larger on March 1, 2014. Placements into feedlots during the month of February totaled 1.650 million head while marketings totaled 1.549 million head.
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Placements were expected to be larger once again in February. The average of analysts’ expectations called for an increase of 9.1% from last year’s number and the range of expectations ran from an increase of 2.2% to 18.2%. So, while the range was wide, everyone who was polled looked for a year-over-year increase. The reported placement number, 1.650 million head, was an increase of 14.7% from February 2013 and a 1.0% increase from the five-year average from 2009 to 2013. Based on this, you should be able to see that last year’s number was a bit out of line. Last February’s placement number was the lowest since the current on feed data started in 1996.
Placements by weight revealed a tendency toward heavier cattle being put on feed, but overall placements were up across all weight classes. Despite lower feed prices in recent months, keeping cattle on grass remains an advantage. Placements in 600 to 699 pound weight group showed the largest year-over-year percentage increase, but was the smallest in terms of head placed (330 million total versus 515 head for the 800 and up group which was the largest).
Nebraska once again led the nation in total placements with 430 million head. Texas accounted for 410 million head and Kanas placed 330 million head. California’s drought appears to have taken it’s toll on the cattle feeding industry with placements dropping 24% from last year and falling 46% compared to last month. It is likely that the drought continues to force cattle off of farms, but now feedlots in the state are in a bind and having to liquidate.
Cattle marketed in February totaled 1.549 million head, down 3.4% versus last year and down 9.4% compared to the average from 2009 to 2013. Pre-report expectations called for marketings to come in at a 2.9% drop, so the reported value was a tad worse than that. This marks the lowest level of cattle marketed since the data began in 1996. Before being too alarmed, keep in mind that supplies are extremely tight and will limit marketings. Also, February is typically one of the two lowest months for marketings during the year due to the timing of placements five to six months earlier (August and September 2013 placements were, respectively, the lowest and second lowest on record) and the lack of prominent demand, for example, given the start of the Lent season.
As a result of the higher placements than were expected and the lower marketings, total cattle on feed inventories were higher than anticipated. The 10.790 million head were 0.5% lower than March 1, 2013 and 3.6% lower than the average from 2009 to 2013. Inventories have risen, month-over-month, the past two months which is typically not the case. So, we are noticing a build-up of inventories at a time when they typically shrink. This is, and should be, concerning. However, the general tightening of supplies has not suddenly evaporated and continues to provide underlying price support.