Impact of COVID-19 on Agriculture

June Cattle on Feed Report Shows Inventory Up From a Year Ago

Market Intel / June 21, 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 category of feedlots represents 85% of all fed cattle. Cattle feeders provide data on inventory, placements marketings and other disappearance.

The report showed a total inventory of 11.7 million head for the United States on June 1. This increase of 1.6% is slightly above average analyst expectations, as most industry analysts were predicting a year-over-year increase in feedlot inventories of 1.3%. 

Expand Image

As usual, Texas, Nebraska and Kansas lead the way in total fed cattle numbers, accounting for just under 7.7 million head, or approximately 65% of the total on-feed inventory in the country. 

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). Typically, May tends to be a larger month for placements, in part due to animals moving off wheat pasture in the southern Plains, and other backgrounding operations elsewhere into feedyards. However, this May most analysts were predicting a rather significant drawback with a 4.1% decrease on average, and some analysts predicting as much as a 7% decline from a year ago. Placements in May totaled 2.06 million head, which is 3% below 2018 levels. Marketings in May were 2.07 million head, up 1% from a year ago and in line with the average analyst expectation of an increase in 0.8%. Moving forward, uncertainty in other commodity markets will spill into the cattle markets.  A result of historic delays in plantings, corn prices are likely to pressure feeder cattle lower as higher feed costs tend to depress what feedlots are willing to pay for feeder cattle. Excellent pasture and range conditions reported in USDA’s Crop Progress report combined with these higher feed costs may incentivize keeping animals on pasture longer, which could result in higher placement weights later on down the road.

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

Share This Article

Credit: iStockPhoto 

Today we face a different sort of inflation (September’s consumer price index was up 5.4% from last year), with specific disruptions cascading throughout the economy, leading to general shortages and price increases. This is similar in many ways to inflation during wartime, when governments take dramatic economy-distorting steps to deal with the crisis, the shape of demand changes suddenly, and certain production and trade flows are interrupted.

Full Article
Credit: Arkansas Farm Bureau, used with permission.  

Released on Sept. 30, USDA’s Quarterly Grain Stocks Report showed that as of Sept. 1 old-crop corn and soybean inventory levels had dropped, compelling USDA to update supply and demand expectations in the October World Agricultural Supply and Demand Estimates, released on Oct. 12. Much higher-than-expected soybean stocks and the subsequent adjustments made for old and new crop supply and demand pushed soybean prices for the 2020/21 marketing year average and the 2021/22 marketing year down sharply.

Full Article