Analysts Estimate Lower May Feedlot Placements

Ahead of the USDA’s monthly Cattle-On-Feed report due for release on Friday, market analysts estimated that the number of young cattle placed into feedlots during May was 7.2% below last May at 1.772 million head.  This would continue a pattern of lower placements that many link to fewer heifers being sent to the feedlots.

However, the report also was expected to show that total feedlot populations of 10.57 million head, or 0.7%, were roaming feedlot pens than there were a year earlier.

That’s because the number of cattle sold to packers, or marketed, were down 7.8% from a year earlier at 1.72 million.

The market compares changes in on-feed numbers to a year earlier because monthly changes in direction are so seasonal as to be useless in determining a trend.  May’s placements, for instance, were expected to be well above April’s, and if the seasonal direction holds, June’s placements will be the lowest of the year.

Seasonal data then show that placements will rise steadily and peak in October as pastures die or go dormant seasonally.




Among the issues that go into the decision to keep heifer calves at home or to market them to the feedlots is the availability of grass for pasturing.  This year, rain has returned to key pasture states like Texas, and farmers and ranchers there are responding by keeping calves on pasture for as long as possible.

Forage prices have declined, adding to the incentive to keep calves on grass for as long as possible.

USDA data on placement weights bears this out.  Placements of calves weighing less than 700 pounds consistently runs about 70,000 head, or 11.1%, below a year ago and 102,500 head, or 15.5% below the previous five-year average.

On the other hand, placements of cattle weighing more than 700 pounds were slightly above a year ago in February and March, dipping to slightly below in April.  Seasonal trends would indicate a jump in May from April.




Cattle feeders were hampered in their desire to place calves on feed by the high prices for the calves.  The cost of the young cattle to put on feed comprises about 79% of the total cost of producing animals fit for slaughter, and multiple years of drought depleted pastures and herds to 63-year lows last year.

Thus, tight supplies from a historically low herd size combined with this year’s lush pastures are working to keep feeder cattle prices high.  Feeder margins from last week’s sales to packers were estimated at $270 a head by Sterling Marketing’s Profit Tracker as prices for fed cattle declined from the previous week.

Using the USDA’s five-area direct price of $153.16 per cwt last week, the Profit Tracker said the average price needed to just break even was $173.95.  A year earlier, cattle feeders were making $170 a head.




Cash cattle markets Wednesday remained quiet with bids of $150 per cwt on a live basis meeting asking prices of $155 to $158.  On a dressed basis, bids were posted at around $240 per cwt, compared with asking prices nearer $250.  Last week, cattle sold at $152 to $155 live and $242 to $244 dressed.

Boxed beef prices Wednesday were up for the third straight day, with the USDA listing its choice cutout at $250.40 per cwt, up $0.93, and the select cutout at $244.38, up $1.82.  Volume was heavy with 1246 loads of fabricated product sold into the spot market.

The CME Feeder Cattle Index for the seven days ended Tuesday was $226.47 per cwt, down $0.22, compared with Wednesday’s Aug settlement of $224.72.