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‘Cattle on Feed’ logs highest June 1 inventory

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Placement numbers come in lower than expected.

The U.S. Department of Agriculture’s latest “Cattle on Feed” report revealed 11.8 million head on feed as of June 1, 2022, the highest June 1 inventory since the series began in 1996. The number was 1% larger than the same period in 2021 and slightly lower than the pre-report trade estimate.

USDA reported placements in feedlots during May totaled 1.87 million head, 2% percent below 2021. Analysts had expected the number to be about even with last year.

Net placements were 1.79 million head. During May, placements of cattle and calves weighing less than 600 pounds were 370,000 head, 600-699 pounds were 270,000 head, 700-799 pounds were 465,000 head, 800-899 pounds were 469,000 head, 900-999 pounds were 220,000 head, and 1,000 pounds and greater were 75,000 head.

Dennis Smith, from Archer Financial Services, said it was a surprise that placements of lightweight calves were up around 5% while heavyweight cattle placements were down about 6%.

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The report revealed marketings of fed cattle during May totaled 1.91 million head, 2% percent above 2021. Pre-report expectations were for a 3% increase.

Both August live cattle and feeder cattle futures closed lower Friday at $133.375/cwt. and $174.20/cwt.

Meanwhile, the Livestock Marketing Information Center (LMIC) has reported that the gross margin between live prices for cattle and wholesale beef narrowed again in May, equaling $391.17 per 1,000 pounds of steer. The five-year average for the month of May is close to $550 and factors in 2020’s high value of $1,592. Tossing 2020 out, LMIC said the five-year average (2019-2015) is $251 per 1,000 pounds of steer.

Across all months, gross packer margins have been wide for the better part of two and half years. The five-year average (2019-2015) of all months is $245 per 1,000 pounds of steer. The 2020 average was $511, and 2021 was $684.  Five months into 2022, the average gross margin is $444 per 1,000 pounds of steer.

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