There was little real news for the live cattle market in last Friday’s monthly USDA Cattle-on-Feed Report which pegged the feedlot inventory in line with trade expectations and cofirmed a drop off in feedlot placements.
March placements of cattle on feed came in a bit stronger-than some observers anticipated, but so did monthly feedlot marketings, with the result that USDA put the supply of cattle in feedlots as of April 1 at 102% of a year earlier, matching the average of trade expectations, which ranged from 101.3%-103.1%.
The real news for the market was in USDA’s cold storage report, which showed an unexpected jump in U.S. frozen beef stocks, raising new concerns about demand.
USDA pegged total March 31 frozen beef stocks at 507.9 million pounds, up 37.1 million pounds or 7.9% from a month earlier and 62.4 million pound or 14% from a year earlier. On average, over the previous five years, frozen beef stocks had declined by 16.9% during March.
The build-up in beef stocks appears to confirm the damage to beef demand done by the controversy over "pink slime" and also suggests that U.S. beef exports remained slower than a year earlier during March. High retail beef prices and high gasoline prices were also factors that likely slowed beef demand last month.
Looking more closely at the Cattle-on-Feed Report. USDA pegged March feedlot placements at 93.6% compared with trade estimates that averaged 92.5% in a range from 88.6%-96.9%. The agency pegged March feedlot marketings at 96.4%, slightly above trade estimates that averaged 94.5% in a range from 93%-96.3%.
Feedlot placements were expected to be down due to tightening U.S. feeder cattle supplies, improved pasture conditions across large parts of the southern Plains and deteriorating margins for feedlots. Some cattle were also moved off wheat pasture early during February due to advanced crop development. The decline in placements may have been limited by increased feeder cattle imports from Mexico.
The lower feedlot marketing total was partly due to the fact that March held one fewer marketing day this year than last. However, poor packer operating margins, slowing beef demand and high cattle weights held slaughter levels down.
The April 1 feedlot inventory was the largest in four years and was 225,000 head larger than a year earlier, but was also 195,000 head smaller than a month earlier.