Friday, September 20, 2013

Will Cattle Numbers Continue To Tighten?

Cattle prices jumped Thursday ahead of the Cattle on Feed data which is expected to show tightening supplies of beef.

With feeder margins now around negative $29 and an apparent declining feedlot herd, I'll be interested to see if the trend of lower placements continues with Fridays data.

From Cattlenetwork:
Friday’s USDA cattle report is expected to show fewer Cattle on Feed compared to the previous year and placements at their lowest level since the USDA started tracking data in 1996.

August placements are expected to fall from the previous year with numbers forecasted to be 8.9 percent lower than Sept. 1, 2012 data according to Allendale, Inc.
  Some analysts were anticipating higher placements in the August report. Last month’s placements in feedlots during the month of July totaled 1.72 million. The July total was a 10 percent decrease from the same time a year earlier.

The decline is expected to continue as Allendale says cattle feeders remain wary of placing new cattle given the continued loss situation on outgoing cattle. Feeder margins are still in the red, however they have improved over the past month averaging negative $29 per head.

Cattle on feed projections are also lower, with Allendale expecting Friday’s report to show a 6.6 percent decline compared to a year earlier. Last month’s report showed 10 million cattle and calves on feed for slaughter market on August 1, moving six percent lower than the same time period in 2012. The decrease in last month’s data set a new five-year low.

The lower figures reveal decreased beef production numbers lie ahead, which could be impacted further if cow-calf producers decide to retain animals to expand their herds.

The USDA Cattle on Feed report will be released Friday at 7:30 a.m. CST.

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