COF Report Seen Bearish After Initial Bullish Call

Contrary to shoot-from-the-hip reactions Friday, March’s feedlot placement rate in the USDA’s monthly Cattle on Feed report Friday may be considered bearish to futures prices Monday.

The placement rate fell below pre-report expectations by analysts in a survey by Urner Barry, but when placed against the 2015-2019 average, it was nothing special.  And the weight distribution showed the market would have plenty of cattle for the spring/early summer peak demand period.

The USDA said 1.997 million head of steers and heifers were placed on feed in March.  This was 440,000 head, or 28.6%, above last year’s rate of 1.557 million head, but it was up 46,000, or 2.36%, from the previous five-year average of 1.951 million and was considered to be somewhat aggressive.

March marketing rates of 2.040 million head were up 30,000, or 1.49%, from last year’s 2.010 million but were above the 2015-2019 average of 1.782 million by 258,000, or 14.5%.

That left 11.297 million head on feed April 1, very near last year’s 11.297 million but up 47,000, or 0.42%, from the previous five-year average of 11.250 million.




On-feed totals, placements and marketing rates may not be comparable with last year for at least the next two to three months, a market analyst said.  Last year, March was when the COVID-19 pandemic came home to roost in the US; infection rates were rising fast with many hospitalized and some dying.

Packing plants were closing as infection among employees skyrocketed, and it wasn’t until then-President Trump declared packing plants to be necessary businesses did the plants reopen.  Even then, many were not able to keep enough staff on hand to operate at full capacity.

This year’s March placements were the third largest in the last decade as high fed cattle prices led by strong beef demand combined with some delays because of February’s cold weather and drought conditions in western parts of the US.

In fact, March placements dug into lighter calves more aggressively than last year or the previous five-year average.  Placements weighing less than 700 pounds totaled 730,000 head, compared with 530,000 last year and the 2015-2019 average of 624,000.

In contrast, placements weighing more than 700 pounds totaled 1.267 million head, compared with 1.056 million last year and the previous five-year average of 1.362 million.

With the weight distribution of calves entering feedlots in March, it appears there will be no shortage of fed cattle in May, June and into July when beef demand is at its seasonal high, another market analyst said.




Fed cattle traded last week at $119 to $124 per cwt on a live basis, down $1 to $2 from the previous week.  Dressed-basis trading was at $195 per cwt, down $1 to up $2.

The USDA choice cutout Friday was up $1.46 per cwt at $283.77, while select was down $1.56 at $272.13.  The choice/select spread widened to $11.64 from $8.62 with 90 loads of fabricated product and 34 loads of trimmings and grinds sold into the spot market.

The USDA reported Friday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.05 to $1.16 a bushel over the May CBOT futures contract, which settled at $6.55 1/2 a bushel, up $0.05.

There were no delivery intentions posted against the Apr live cattle futures contract Friday.  None were retendered, and none were demanded or reclaimed.

The CME Feeder Cattle Index for the seven days ended Thursday was $136.36 per cwt down $1.17.  This compares with Friday’s Apr contract settlement of $133.85 per cwt, up $1.60 and May’s $137.67, up $0.65.