The March 1 Cattle on Feed report is clearly neutral with all three categories matching well with trade guesses. While placements turned out to be a bit larger than expected, the same can be said about February marketings. Little trade reaction is expected when CME business resumes on Monday.
Cattle on Feed March 1
Average Guess: 105{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
Guess Range: 104.4{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42} to 106{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
USDA ACTUAL: 105{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
Placements in February
Average Guess: 98.5{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
Guess Range: 94{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42} to 103{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
USDA ACTUAL: 99{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
Marketed in February
Average Guess: 103{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
Guess Range: 99{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42} to 106{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
USDA ACTUAL: 104{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42}
Pre-Report Predictions:
The best spin possible relative to on feed expectations may involve ideas of a decrease in placement activity last month. Barring a bearish surprise, the USDA will confirm the first monthly cut in in-movement vis-a-vis the previous year since July of 2010. Many longstanding cheerleaders of deferred live cattle futures will no doubt say, “It’s about time!.
When February began, it was hoped that placement activity would decline at a faster pace (e.g., 5 to 10 percent below 2010). Yet as the month progressed and auction barn receipts remained relatively high, optimism in this regard started to fade. Late January storms probably pushed more feeder cattle into February. Furthermore, poor wheat pasture conditions may have triggered earlier-than-expected movement toward the feed bunk.
On the other hand, some bulls will try to wave the flag of aggressive placement in February and what it means in terms of feedlot currentness. If big lots did indeed market 3{b5a992b8e63762954627fabd02ae0ce4cbdce5a7319b086354586c608f95fa42} more fed steers and heifers than 2010, the out-movement significantly exceeded the placement implications of the Sep-Oct period (e.g., the DTN placement model projected that cattle scheduled to finish in February should fall 2 percent below the previous year).
Part of this unexpected marketing effort was simple compensation for the much slower importation of Canadian slaughter cattle in February (i.e., off nearly 70 percent).
Yet regardless what bulls manage to emphasize late Friday afternoon, they will need to divert attention away from the fact that total feedlot population remains substantially above the previous year for the eighth consecutive month.
(AG)
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Posted with DTN Permission by Haylie Shipp
