The U.S. Department of Agriculture’s latest “Cattle on Feed” report provided a bearish surprise after September placements came in larger than the trade had anticipated -- up 13% from last year during September, at 2.15 million head. The average trade estimate was for an 8% increase from year-ago levels.
The U.S. inventory for feedlots with capacity of 1,000 head or more totaled 10.8 million head on Oct. 1, 2017 -- 5% above Oct. 1, 2016, but near pre-report average trade estimates. Oklahoma State University Extension livestock marketing specialist Derrell Peel noted that the inventory was also the largest October inventory since 2012.
The inventory included 6.93 million steers and steer calves, up 2% from the previous year. USDA said this group accounted for 64% of the total inventory. Heifers and heifer calves accounted for 3.88 million head, up 13% from 2016.
Peel said the numbers indicate continued growth in heifers on feed and noted that heifer retention -- and likely herd growth -- is slowing.
“Heifer slaughter so far this year is consistent with these inventory totals -- up 12% year over year -- and suggests that heifer slaughter will continue to grow for the foreseeable future,” he said.
Despite the increase, Peel noted that the average ratio of steer to heifer slaughter, which peaked in 2016 and is adjusting downward, is still at levels not seen since 1975 (prior to mid-2015).
Year-to-date steer slaughter is up 2.9% versus last year, he added.
Net placements were 2.09 million head. During September, placements totaled 405,000 head of cattle and calves weighing less than 600 lb., 340,000 head for those weighing 600-699 lb., 490,000 head for those weighing 700-799 lb., 515,000 head for those weighing 800-899 lb., 285,000 head for those weighing 900-999 lb. and 115,000 head for those weighing 1,000 lb. and greater.
Marketings of fed cattle during September totaled 1.78 million head, 3% above 2016 and near the average pre-report trade estimate.
Other disappearance totaled 58,000 head during September, 38% above the 2016 level.
As Informa IEG had anticipated, early 2018 futures contracts saw losses during Monday morning trading. The firm also projects that cash trade likely will move mostly sideways to modestly lower, holding in the $109-114/cwt. area throughout the balance of October and into November.