Cattle on Feed as of April 1
Average Guess: 105{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2}
Guess Range: 104{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2} – 106{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2}
March Placements
Average Guess: 104{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2}
Guess Range: 98.5{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2} – 109.0{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2}
Marketings in March
Average Guess: 103{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2}
Guess Range: 102.5{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2} – 105{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2}
After a brief easing in placement activity in February (i.e., the first total smaller than the previous year since July of 2010), private analysts believe that in-movement once again accelerated last month. Indeed, most of the guesses actually based on real sampling (rather than spreadsheet interpolations) point to increases in the upper end of the placement range noted above.
While many focusing on the smaller and smaller pool of feeder cattle outside of feedlots understandably shake their head and wonder how much longer such aggressive usage can continue, there are several good reasons why cattle buyers kept “waving them in.”
Decent feeding profits thanks to March’s sharply higher fed market, strong premiums on deferred cattle futures, and wheat pasture clean-up are three factors that probably go far in explaining at least a 4{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2} increase in placement last month (a total near the trade guess would be 7{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2} larger than the 3-year average).
Even the initial population of wheat pasture was smaller than year, higher wheat prices as well as dry conditions in the Southern Plains are working to limit graze-out plans. That probably means that the first quarter sweep of “wheaties” toward the bunk line was more aggressive.
A bigger March placement total will logically compound the fed tonnage challenge in the third quarter.
Once again, the USDA is expected to confirm large feedlot marketings last month, larger than one might infer given the moderate placement activity of the fall period. Near record high packer bids were helpful in that regard and the same goes for the stronger-than-normal basis enjoyed by hedgers. Keep in mind that fed marketing in March is projected to be 3{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2} above 2010 despite the fact that the importation of Canadian fats fell by 48{dfeadfe70caf58f453a47791a362966239aaa64624c42b982d70b175f7e3dda2}.
For more Harrington comments check out http//:www.feelofthemarket.com
(AG)
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