The January Cattle on Feed report is viewed neutral to slightly bearish for cattle futures at the start of next week’s trade. The December placement rate was above expectations; yet, the on feed total was barely above expectations. However, the report confirmed a January 1 cattle on feed total 11.5 million head, or the largest figure since 2012. This validates the USDA’s forecast for record large 2nd quarter production.
The big surprise in the report was the December placement rate coming in above a year ago. The average trade estimate had called for December feedlot placement rate of 97% of last year, while the actual total was at 101% and the largest since 2000. The weight group placement data showed a record large number of cattle placed weighing over 700 Lbs, while placements under 700 Lbs was at a 6 year high.
The estimated average placement weight is at 701 Lbs, down 1 Lb from last year. The marketing rate at 99% was right at expectations which also aligned with the slaughter report on Thursday.
Net feedlot flows showed that feedlots market marketed 27,000 head more than were placed, versus 47,000 head last year. This was also the smallest December to January change in on feed inventories since 2007/08!
The January Cattle on Feed Report was also a quarterly report, which included data for cattle on feed by class. The data indicated that heifer retention by the cow/calf industry is slowing. NASS reported that there were 4.154 million heifers on feed, which was a huge 16% increase over last year, and also the largest year over year increase since NASS began reporting back in 1996.
Not only was the number of heifers on feed larger than last year, but again made up a larger percentage of total cattle on feed. 36% of all cattle on feed were heifers, which was a 5 year high.
Next week’s Cattle Inventory Report could likely show fewer heifers retained, but is also expected to show unchanged or higher January 1 feeder cattle supplies, as more heifers head to the feedlot in 2018 and new pen space becomes limited.
