USDA launched the April Cattle on Feed report on Friday April 21. This month-to-month publication estimates the variety of cattle on feed at feedlots with capability of over 1,000 head and serves as a measure of probably beef manufacturing over the following a number of months. Whereas the cow herd has been reducing in dimension for a number of years, a rise within the variety of females within the beef system saved on-feed numbers operating comparatively excessive for a lot of 2022. Lastly within the fall, the long-expected shift occurred, and on-feed numbers have been operating under year-ago ranges since then.
In Friday’s report, April 1, 2023, on-feed stock was estimated to be down about 4.5% from April 1, 2022. Whereas this may not instantly increase any eyebrows from informal observers, this on feed quantity was larger than anticipated and actually got here right down to March placements being higher than most pre-report estimates. The web impact was that complete on-feed stock was just about unchanged from March 1 to April 1, which was counter to what many anticipated. As I write this on Monday April 24, dwell cattle futures have been combined whereas feeder cattle futures have been down a bit. On the feeder cattle board, the damaging worth change lessens as we transfer away from the spring contracts.
Whereas I’m hesitant to make gentle of any shock in a significant USDA report, it does seem that the market response has been fairly minimal. That is very true when one is reminded that feeder cattle futures have been steadily rising for months. Whilst this report is digested, fall feeder cattle futures are nonetheless above $230 per cwt and nicely above the place they began 2023. Additional, there have been quite a few components impacting placement patterns over the past couple of years with excessive feed costs and drought being on the prime of the checklist.
There are some doable explanations for the larger-than-expected March placements quantity. First, March is a month when cattle are sometimes moved off of wheat pasture. Continued dry climate in a lot of the Southern Plains, mixed with excessive wheat costs, probably impacted motion of feeders final month. Secondly, dwell cattle imports from Mexico have been larger in March, which might contribute to placement numbers. And at last, there may be nonetheless loads of keep on the feeder cattle board, so it is extremely doable that feedlots are aggressively shopping for feeders forward, in anticipation of the rising worth ranges prompt by deferred feeder cattle futures contracts. Put merely, I completely assume that feedlot placements bears watching within the coming months, however I think the bigger placement quantity final month had extra to do with timing than a significant shift in market fundamentals.
