Impact of COVID-19 on Agriculture

July Cattle on Feed Report in Line with Expectations

Market Intel / July 19, 2019

Credit: U.S. Department of Agriculture / CC BY 2.0 

The Cattle on Feed report provides monthly estimates of the number of cattle being fed for slaughter. For the report, USDA surveys feedlots of 1,000 head or more, as this represents 85% of all fed cattle. Cattle feeders provide data on inventory, placements, marketings and other disappearance.

The report showed a total inventory of 11.485 million head for the United States on June 1. This increase of 1.8% is in line with expectations, as industry analysts’ predictions showed an average year-over-year increase in feedlot inventories of 1.8%. 

Expand Image

While total inventories are an important component of the report, other key factors include placements (new animals being placed on feed) and marketings (animals being taken off feed and sold for slaughter). June placements typically tend to drop following a higher batch of placements for May. This June, analysts predicted an average 2.1% decrease from the 2018 number, which was actually a large placement number for June relative to history. This expectation was largely driven by lower Agricultural Marketing Services-reported feeder cattle sales, which may be a result of historically good pasture and range conditions combined with higher feeding costs, which incentivizes keeping the animals on pasture longer and placing at higher weights. However, there was some uncertainty in analysts’ expectations for the placement number, resulting in a very large range of a 6.8% decrease to a 5.7% increase. Placements in June totaled 1.756 million head, which is 2.3% below 2018 levels, in line with the average of industry forecasts. We did see heavier placement weights versus a year ago, which is in line with better pasture conditions. Marketings in May were 1.945 million head, down exactly 3% from a year ago and in line with the average analyst expectation of a decrease of 3%. 

Expand Image

Contact:
Michael Nepveux
Economist
(202) 406-3623
michaeln@fb.org
twitter.com/@NepveuxMichael
 

Share This Article

Credit: Mark Jones / CC BY 2.0  

This report showed a total inventory of 11.973 million head for the United States on November 1, up from 2019 and from last month. This 1.3% year-over-year increase is slightly below analysts’ expectations of an average increase of 1.8% in feedlot inventories, but still within the expected range.

Full Article
Credit: USDA/ CC BY 2.0 

Significant increases and variability in wage rates for the Department of Labor’s H-2A temporary agricultural guest worker program have long been a problem for farmers. For example, during 2019, wage rates under the H-2A program increased by more than 20% in Colorado, Nevada and Utah. In California, wage rates have increased by more than 30% since 2015, and in 32 states the wage rate has increased by more than 20% since 2015. The national average H-2A wage rate increased by 21.2% from 2015, and by nearly 6% in a single year from 2019 to 2020, e.g., 2019 H-2A Sets Records, While a 2020 AEWR Wage Increase Approaches.

Full Article