A heavier-than-anticipated flow of calves into feedlots during September pushed the On Feed number to the top end of the pre-report guess range. Feedlots stayed on top of marketings last month, but movement of animals to slaughter failed to offset those entering feedyards.
A weight breakdown of September Placements shows the impacts of severe drought in the Southern Plains continue to influence the flow of calves into feedlots. Lightweight placements were up 34.3%, while 6-weight placements dropped 8.8%, 7-weight placements dropped 16.4% and heavyweight placements dropped 3.4% from year-ago. As the supply of lightweight calves declines, that would lead us to believe the placement pace should slow in coming months.
USDA's report data is price-negative, especially for far-deferred futures. Live cattle futures are expected to open under pressure, but the bulk of the price activity should be driven by bull spreading.
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