Feedyard activity: A tale of two very different years

Feedyard activity: A tale of two very different years

2014 was one of the best years ever for cattle feeders. 2015 tells a different tale.

Since early April when fed trade scored $167-8, the market has made positive gains in only five out of 24 weeks. Cumulatively, cattle feeders have endured a $35 per cwt. skid, encroaching on a $475-500 per head drop in value, over five months. 

As a result, closeouts have been very challenging through most of 2015. Not surprisingly, cattle feeders are fighting the market. That’s driving reluctance to both buy and sell cattle.   

Fed cattle marketings through August total 784,000 fewer head compared with last year. Additionally, August marketings were the slowest for the month in USDA’s Cattle on Feed series dating back to 1996. From a collective standpoint, the unavoidable consequences of slow marketings are to impact the front-end supply and pressure the market even more. Accordingly, cattle feeders are finding themselves running behind in terms of capacity utilization while also being increasingly loaded on the front end.   

year-to-date feedlot placements

Feedyard placements are also dragging. Negative closeouts, coupled with the prospect for the pattern to continue into spring, makes for reluctant buyers. Plus, weaker prices have made for reluctant selling. Year-to-date, through August, placements are running 681,000 behind 2014. Moreover, similar to marketings, August placements also were the smallest in USDA’s Cattle on Feed series.    

How do you perceive the current market? What’s your view of any type of market recovery or timing for some type of resurgence? Will the market’s slump since April influence the cow-calf sector’s intention to expand in the coming years?  

Leave your thoughts in the comments section below. 

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