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Higher Placements Are Puzzling…And Bearish

high cattle placement rates impact cattle prices
Cattle feeders placed 6% more cattle on feed in March, more than most everyone expected.

A whole lot more cattle than expected were placed on feed in March, according to Friday’s afternoon’s monthly Cattle on Feed report. Earlier in the week, the average survey estimate pegged placements at 0.9% less than last year. Instead, at 1.90 million head, they’re 6% more, almost 3% more than the top range of survey estimates.

“…These data are nearly inexplicable following another year of deep culling of breeding stock, but forage availability of any kind has been very tight and the placement value from a year ago was very low at 93.6% of 2011,” analysts with the Agricultural Marketing Service (AMS) said Friday. “However, feeder cattle indeed continue to come out of the woodwork with nationwide auction receipts surprisingly heavy so far this month…”

The on-feed inventory of 10.9 million head was estimated at 5% less than a year earlier. The pre-release estimate was a decline of 6.1%.


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Marketings of 1.77 million head in March were 8% less than a year earlier. The average guess ahead of the report was for marketings to be 6.5% less.

CME Feeder Futures and deferred Live contracts will likely feel the pinch of Friday’s report,” AMS analysts say. “The April feeder board is already maturing at its lowest point and nearly $25 lower than when it was heavily traded early this year.”


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