Friday was a good day for those with a bearish slant to their market outlook. Both the monthly Cattle on Feed report and USDA’s midyear Cattle Report gave the bears something to smile about.
USDA’s Cattle on Feed report indicated that while July feedlot inventories and June marketings were very much as expected, June feedlot placements were larger than analysts’ average pre-report estimate, according to the Daily Livestock Report.
June placements into the surveyed feedlots (those that have capacities of 1000 head and more) were 0.9% higher than one year ago and 1.8% higher than analysts, on average, expected. “That difference appears at first glance to be quite large but remember that we are comparing to some very low numbers one year ago. Add that to the fact that this June had on more business day than one year ago and we are led to conclude that the year over year change may not be as significant as that 1.8% difference implies. The market may see it as negative, but we are not ready to conclude that it means any big changes in fed cattle numbers 5-7 months down the road,” DLR economists say.
Feedlot inventories totaled 10.236 million head on July 1, 1.9% higher than one year ago and slightly larger than analysts were expecting. “We do not think the difference is material at this point, but do note that feedlot numbers are slowly moving away from the 5-year lows near which they have hovered for practically all of the past two years. The beef sector doesn’t change quickly but it does change — if Mother Nature cooperates!”
Click here for more on the COF report, plus an analysis of USDA’s midyear Cattle Report.