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Feedlots Remain in Good Supply Shape

January 21, 2010
 
 
 

By Steve Kay, Cattle Buyers Weekly

Feedlots remain in good shape regarding supplies of market-ready cattle because of larger than expected marketings in December. Feedlots marketed nearly 3% more cattle in the month than a year earlier, according to analysts' forecasts ahead of this Friday's Cattle on Feed (COF) report.

This is because packers killed an estimated 2.2% more fed steers and heifers in December than in December 2008. This has helped reduce some of the expected increase in market-ready supplies during the first quarter. The increase is because of the year-on-year larger placements from last July to October.

December placements are forecast to be 3-5% lower than the year before. But analysts' forecasts vary widely, from a low of 89.6% to a high of 99.6%. This means that the forecasted number of cattle in feedlots (1,000 head and over) might come in somewhere between 97.5% and 99% of last year. The consensus is for the COF to be down 1.7% on the previous year.

The decline in the U.S. cattle inventory, with a lower calf crop, began to be reflected in below year ago December placements, says Jim Robb, Livestock Marketing Information Center. Winter weather conditions were also a factor in the smaller placements. December typically is one of the lowest placement months of the year, he says. December marketings were rather strong. But feedlots on average did not show any profits for the month, says Robb.

December marketings were quite robust, says Bob Price, North America Risk Management Services. Cattle feeders did a good job of reducing their carryover. With the weather taking off weight, total beef tonnage in the first quarter will be subdued relative to earlier thoughts. The big wildcard is the level of December placements, he says. He forecasts them at 89.6% of the prior year (the lowest forecast)  because of the weather and what he calls no bargains to be bought in the feeder cattle market. His placement number helps put his forecasted Jan 1 COF total at 10.95M head. That would be down 2.5% from last year and the smallest for the date since 2003, says Price.


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RELATED TOPICS: Beef

 
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