Feeders Urged To Continue Aggressive Cattle Sales

US cattle feeders must continue to market fed cattle to packers aggressively or they risk having to deal with too many cattle that weigh too much.

The USDA’s National Agricultural Statistics Service last week issued its monthly Cattle on Feed report, which showed feedlot placements of calves in June at 1.770 million head, about 16% more than in June of 2016.  This was after a 12% increase in May, an 11% rise in April, a 12% increase in March, a 1% decline in February and an 11% increase in January.

Feedlots have been selling finished cattle to the packing plants actively, but it hasn’t been enough to keep the total number on feed from rising above a year ago.  Total numbers on feed declined last month, but there is a very strong seasonal component to the numbers going down during the summer.  Plus, the total remained well above last year and the 2011-2015 average.

Currently, analysis of the Cattle on Feed report shows feedlots continuing to sell cattle aggressively, probably as fast as the packer will buy them.  .

Given the strong seasonal for those sales to decline unevenly over the next few months, it is probable that feedlot marketings will be shown to be lower in next month’s report.  If they can only stay above last year and the average.




However, active sales may not continue, and if they do, they may not be enough.

Active feedlot sales were thought to be the result of very profitable margins.  Such positive margins may continue if calf prices continue to erode and feed costs remain in check.

However, the number of cattle on feed for 90 days or more has been moving slightly lower overall since March and could break through the 2011-2015 average next month, if it doesn’t drop sharply.  This would make feedlot inventories slightly more front-end loaded, with the prospect of becoming even more front loaded as time goes on.

The good thing for cattle feeders is the number of cattle on feed for 120 days or more remains well below last year and the previous five-year average.  However, this just could be the result of a tendency of the industry to place heavier calves into the feedlots over the last several months and may be irrelevant to the analysis.

In addition, the live cattle futures market is projecting higher fed cattle prices in February than it is now.  Oct and Dec delivery contracts are lower, but feedlots with calves that could finish in December may try to hold them into next year, exacerbating the situation.




Fed cattle sales on the livestock exchange video auction Wednesday averaged $117.68 per cwt, down $0.59 from $118.27 last week.  Lots with one- to nine-day delivery sold at $117.72, compared with $118.30 last week, and lots with one- to 17-day delivery sold at $117.63, compared with $118.00 last week.

Light cash cattle trading was reported Wednesday at $117 per cwt on a live basis, down from $118.25 to $120.50, mostly $120 last week.  Dressed-basis trade was at $188, down $1 to $2.

The USDA’s choice cutout Wednesday was down $0.55 per cwt at $207.07, while select was off $1.06 at $197.87.  The choice/select spread widened to $9.20 from $8.69 with 107 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Tuesday was $151.57 per cwt, unchanged.  This compares with Wednesday’s Aug settlement at $146.47, down $0.05.