by John Harrington, DTN Livestock Analyst
Cattle on Feed Preview:
Cattle on Feed Feb. 1
Average Guess: 102.5{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f}
Guess Range: 102 – 103.5{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f}
Placed in January
Average Guess: 98.5{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f}
Guess Range: 94 – 101.5{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f}
Marketed in January
Average Guess: 100.5{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f}
Guess Range: 94 – 103.5{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f}
Barring a bearish surprise, USDA is expected to confirm another round of smaller feedlot in-movement in January when the monthly Cattle on Feed report is released Friday at 2 p.m. CST. This stands to be the fifth time in the last six months that placement activity has fallen below the previous year.
Yet despite this positive pattern, bulls are still waiting for news of the BIG cut-back, one that will go far in justifying the price optimism of deferred live cattle futures.
To be sure, such price-friendly anticipation will not die easily, not given the hard fact that the estimated inventory of feeder cattle over 500 pounds outside of feedlots at the beginning of 2012 was historically small, nearly a million head or about 6{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f} smaller than last year.
That limited pool of feeder cattle will be asked to supply feedlot placements as well as stocker cattle for summer grass and additional heifers to grow the cow herd. Outside a major screw-up in USDA arithmetic (it’s happened before) significantly smaller placements in the months ahead would seem to be inevitable.
Some may be surprised by expectations for big lot marketings in January to be above 2011. That may not feel right given the early-year pattern of slowing chain speed. Indeed, preliminary numbers suggest that fed slaughter last month fell approximately 2{962fe9be9a8a5c386944bfa41f48d98b010325707b70b1fa6182bcabd27c5d7f} below January 2011.
Yet the difference can be explained in terms of two factors: 1) Few Canadian fats moving across the border; and 2) The smaller contribution of fed cattle by smaller lots. Both of these realities probably forced big lots to work extra hard to make up the short fall.
The January marketing total is expected to slightly eclipse net placement (i.e., gross placement minus other disappearance), pulling the February 1 bunk line somewhat below that measure on January 1. Still, the midwinter feedlot population could still be the largest since 2008.
For more Harrington comments check out http//:www.feelofthemarket.com
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Posted with DTN Permission by Haylie Shipp
