May's Cattle on Feed Report

On Friday the USDA released its Cattle on Feed Report, while there wasn’t any earth shattering news -- as the shrinking numbers continue -- there was one little surprise at least for some analysts.
Given the improving pasture conditions in some parts of the country, some analysts didn’t expect the report’s 2 million head of cattle being placed into feed lots in May -- still 2 percent below the same time last year, but more than expected.
USDA livestock analyst Shayle Shagam says it is important to remember
Shagam: “Conditions remain very, very poor in terms of availability of forage and dryness in parts of the Southern Plains.”
Shagam continues with report’s highlights.
Shagam: “The number of cattle on feed in feedlots with 1,000 head or greater on June 1st was about 10.7 million head, which was about 3 percent below a year ago. During May producers placed 2 million head -- 2 percent below a year ago. And they marketed just over 1.9 million head which was 3 percent below a year earlier.”
So less available cattle should mean that steer prices should be headed higher. Although lately the price has been about $120 per hundred weight, Shagam says
Shagam: “But you know the longer term trend is that as supplies continue to tighten over time, fed cattle prices will be moving up.”
He thinks prices this year may increase to $130 as compared to last year’s average of $123 per hundred weight.