Cattle on Feed Surprises Some Analysts

Some industry analysts are expressing surprise at the numbers in Friday’s USDA report on cattle feedlot activity. Especially the low number of cattle that were placed into feedlots last month. The industry analysts were expecting a drop of 2 percent from July a year ago what they got a 10 percent drop of only 1.7 million head going into feedlots.

USDA Livestock Analyst Shayle Shagam says:

Shagam: “So the fact that placements were down almost 10 percents implies that there is going to be much tighter supplies of cattle in the later part of 2013 than many of the industry analysts were expecting and that would tend to be price supportive for fed cattle.”

Prices currently averaging $123 per hundred weight. Shagam says prices will increase as the year goes on.

Shagam: “Obviously as we move into 2014 and supplies tighten even further, we are looking at prices which are going to average $126 to $136.”

Feedlot inventory is currently 10 million head - down one million since January and down 6 percent from a year ago. He adds

Shagam: “The number of cattle that were marketed during July was 2 million head which was about 5 percent above a year earlier but that also reflects the fact that there was one extra day slaughter day during July. If you make the conversion to equal the number of slaughter days year-to-year comparison marketings during July were about unchanged from a year ago.”