While large placements into feedlots in August surprised many in the cattle industry, the number of cattle moving on to slaughter was even higher — positive news for an industry facing increased beef supplies.
The number of cattle placed in large feedlots across the U.S. in August was up 3 percent year over year to 1.928 million. Fed cattle marketed were up 6 percent to 1.979 million, USDA National Agricultural Statistics Service reported.
Placements were larger than expected, and for some folks it was a bit of a surprise, said Derrell Peel, livestock marketing specialist with Oklahoma State University Extension.
“This one was awfully hard to call,” he said.
There were indications for placements to go both higher and lower, he said.
Pre-report estimates ranged widely from about a 12 percent decrease to a 4 percent increase in placements year over year.
On the one hand, good pasture and range conditions in most of the country supported lower placements. On the other, drought in the northern High Plains, profitable prices on fed cattle and potentially more heifers heading to feedlots were arguments for higher placements, the Daily Livestock Report noted ahead of the report.
But higher placements shouldn’t be a surprise to anyone, Peel said
“We know there’s more cattle out there, and there are going to be more placements in the foreseeable future. … The question is how we handle these as they come through the system,” he said.
Marketings relative to placements is more relevant than how many cattle are going into feedlots, he said.
“In the past 12 to 15 months placements have gone up a lot, but so have marketings,” he said.
Marketings show the industry is moving cattle through the system very well, and that’s keeping the industry in a “real good place,” he said.
While feedlot inventories are up year over year, marketings pulled them down last month, he said.
The number of cattle on feed on Sept. 1 was up 4 percent year over year to 10.6 million head, but it was down 100,000 head from Aug. 1, NASS reported.
Marketings are keeping up with placements, and inventories are only slightly larger than year-earlier levels. The Sept. 1 on-feed inventory was up a modest 369,000 head, he said.
January through August, placements were up 8.4 percent. But marketings were up 6.1 percent, largely offsetting the increased placements, he said.
Strong demand for beef is evident in retail prices, which for the last two months have been basically the same as a year ago. Selling more beef at the same or higher price is a good measure of demand, he said.
Fed cattle prices “have held up pretty well, given we’re moving that many cattle through the system,” he said.
Markets were off hard on Monday following the report, with near futures for fed and feeder cattle both closing the daily limit down. But they were poised for a correction after a dramatic run-up in prices over the last month, and large placements were a “good excuse,” he said.
“It doesn’t surprise me. If we hadn’t had the big run-up over the last month … I don’t think we would have seen this same sort of reaction,” he said.