Larger, Lighter Placements

The latest Cattle on Feed Report was released on Friday, September 21 after the markets closed. The Monday reaction today was lower live cattle and feeder cattle futures contract prices. Large supplies continue to be the trend as we saw (yet another) largest-on-record total feedlot inventory. Inventory on September 1st was estimated at 11.125 million head which is the largest for any September 1st since at least 1996 when the data collection began. This was 5.9 percent larger than September 1, 2017.

Placements were again the big story. More specifically, placements of lighter-weight cattle were the big story. Placements of cattle into feedlots during August were 7.4 percent larger than during August of 2017. That was above the pre-report estimate of about 5 percent larger than a year ago. This estimate compared to the expectation is likely a big factor in the lower futures prices on Monday as it indicates larger supplies than previously expected.

The weight breakdowns are where the real information is for this report. Placements of cattle weighing less than 600 pounds were up 19.4 percent while the 600-700 pound category was up 17.5 percent compared to last year.  Since May, placements of cattle under 700 pounds is up approximately 13 percent while the over 700 pounds category is down 1.0 percent compared to the same period of 2017.  While difficult to point to directly, increased numbers of heifers in the placements mix is likely a driver in these lower placement weights. Heifer slaughter has been about 8 percent larger so far in 2018 compared to the same period of 2017.

Fed cattle marketings were approximately the same as August 2017 and were in-line with pre-report expectations. Steer slaughter is lower than a year ago, but larger beef production is coming from increased heifer and cull cow slaughter. Cow slaughter is up over 11 percent from last year. It is interesting that cow and heifer slaughter is up while steer slaughter is down – though that likely won’t be the case by the year’s end.

Overall, this report continued to tell the story of larger supplies working through the system. Seasonally, placements start to increase in August as more calves are sold and yearlings come off summer pasture. There are still plenty of cattle to place during the rest of 2018.





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