Logic suggested markets should view Friday’s Cattle on Feed as at least neutral, with placements 2% less than expected. However, the fact that placements were 10% higher year over year also suggested there might be an opportunity for bears to press their case with follow-through selling. Instead, Cattle futures climbed higher to start the week, gaining back a lion’s share of Friday’s retreat.
Live Cattle futures closed an average of $1.27 higher.
Feeder Cattle futures closed an average of $2.72 higher.
Wholesale beef values were firm on moderate demand and offerings, according to the Agricultural Marketing Service.
Choice boxed beef cutout value was 67¢ higher Monday afternoon at $233.24/cwt. Select was 59¢ higher at $211.91.
Corn futures closed mostly 2¢ to 3¢ higher through Mar ’21 and then 1¢ higher.
Soybean futures closed 2¢ to 4¢ lower through Sep ’20 and then mostly 1¢ higher.
Major U.S. financial indices closed higher Monday, with growing optimism about the U.S. and China reaching agreement on the first phase of a trade deal.
The Dow Jones Industrial Average closed 190 points higher. The S&P 500 closed 23 points higher. The NASDAQ was up 112 points.
“Annual average feedlot inventories (12-month moving average) peaked in August but there is a chance that strong placements in the next few months could push to a higher average total,” says Derrell Peel, Extension livestock marketing specialist at Oklahoma State University, in his weekly market comments. “In other words, feedlot inventories are close but may not yet be quite at a cyclical peak.”
Reviewing Friday’s monthly Cattle on Feed report, Peel points out heavy feeders dominated placements.
“Placements of feeder cattle over 800 lbs. were up 29.5% year over year, with placements 700-800 lbs. up 14.9% compared to one year ago,” Peel says. “Meanwhile, placement of feeders under 600 lbs. were down 6.3% year over year. In the three months from August-October, placements of feeders over 700 lbs. were up 4.6% year over year, while placements of cattle less than 700 lbs. were down 2.8%. This means that feedlots will be somewhat front-loaded for the next few months.”
As noted in Monday’s Cattle Current, 46.02% of October placements weighed 699 lbs. or less; 40.05% weighed 700-899 lbs.; 13.93% weighed more than 900 lbs.
“It would appear that anecdotal stories of cattle doing very well this summer were accurate, given placement weights,” says David Anderson, Extension livestock economist at Texas A&M University. “It’s interesting to note that 25,000 more head were placed weighing over 1,000 pounds than a year ago. For the year, placements are about half a percent ahead of last year.”
In the latest issue of In the Cattle Markets, Anderson explains most heavyweight placements in the fall usually come in September, while heavyweight placements in the spring usually come in March and May as cattle come off wheat pasture and other winter grazing programs.