Cattle on Feed Report     01/22  14:05

Jan. 1 Cattle on Feed Up Slightly

By DTN Staff

                      USDA Actual   Average Estimate       Range
On Feed Jan. 1            100%           99.3%        98.8-99.9%
Placed in Dec.            101%           97.0%       98.9-106.5%
Marketed in Dec.          101%          100.7%      100.3-101.8%

OMAHA (DTN) -- OMAHA (DTN) -- Cattle and calves on feed for the 
slaughter market in the United States for feedlots with capacity 
of 1,000 or more head totaled 12.0 million head on Jan. 1, 2021. 
The inventory was slightly above Jan. 1, 2020, USDA NASS 
reported on Friday.

The inventory included 7.40 million steers and steer calves, up 
slightly from the previous year. This group accounted for 62% of 
the total inventory. Heifers and heifer calves accounted for 
4.57 million head, down slightly from 2020.

Placements in feedlots during December totaled 1.84 million 
head, 1% above 2020. Placements were the second highest for 
January since the series began in 1996. Net placements were 1.78 
million head. During December, placements of cattle and calves 
weighing less than 600 pounds were 460,000 head, 600-699 pounds 
were 435,000 head, 700-799 pounds were 425,000 head, 800-899 
pounds were 317,000 head, 900-999 pounds were 110,000 head, and 
1,000 pounds and greater were 95,000 head.

Marketings of fed cattle during December totaled 1.85 million 
head, 1% above 2020. Marketings were the second highest for 
January since the series began in 1996.

Other disappearance totaled 60,000 head during December, 10% 
below 2020.

DTN ANALYSIS

"Why does it seem like every time the market closes sharply 
higher and has the industry on the edge of its seat waiting for 
a highly anticipated bullish report to be shared that bearish 
news ends up creeping into the marketplace? Surprise, surprise! 
Friday's Cattle on Feed report did not unveil what analysts 
projected whatsoever and ended up showing higher placement 
figures for the month of December 2020," said DTN Livestock 
Analyst ShayLe Stewart. 
 
"Cattlemen and feedlots alike were praying that the report would 
yield lighter placement numbers and ultimately be added to the 
last two reports that also showed lighter placement figures. 
But, most importantly, lighter placements mean that, later, 
tighter fed cattle supplies will most likely be found, which can 
help feedlots regain some market share and greater 
profitability. 

"Conversely, higher placements mean greater placements could be 
found later down the road, which can pressure the market's 
supply and cause prices to fall lower. When looking at the data 
shared in Friday's report, it's important to keep a couple of 
things in mind.

"First, placements were up a mere 1% -- not 2%, not 5%, but 
simply 1%. Following two months of lighter placements, we must 
understand that, at some point, cattle were going to start 
working their way back into the feedlots and would end up being 
accounted for on this report.
 
"Secondly, putting aside what we all hated about 2020, the fact 
remains that, with unmatched consumer demand, beef slaughter 
speeds were commendable throughout the year. On a per head 
basis, only roughly 3.5% fewer cattle were processed in 2020 
than in 2019 even with reduced slaughter speeds throughout the 
spring and the lack of the food service industry. So, when 
December came around and feedlots were happy to market their 
heavier cattle to packers instead of carrying them into the New 
Year, that allowed for more bunk space to become available and 
ultimately led to higher placements.

"In conclusion, Friday's Cattle on Feed report took the market 
by surprise, as higher placements weren't even considered an 
option earlier in the week. After the market takes in the 
initial shock of 'higher placements,' there is still enough 
technical and fundamental support working in the market's favor 
that this report shouldn't crumble the market to its core."

**

DTN subscribers can view the full Cattle on Feed reports in the 
Livestock Archives folder under the Markets menu. The report is 
also available at https://www.nass.usda.gov/.