Cattle on Feed Grows Again

 

The number of cattle on feed hit an October record in 2020, at 11.7 million head. Placements and marketings were up over a year ago, as well. Digging into USDA’s report a little deeper reveals some more interesting directions for the cattle market in coming months.

 

Marketings were up 6.2 percent over September 2019. Given one more working day in the month that means daily average marketings were above a year ago for the second month in row. The ability to slaughter more cattle per day, on average, than a year is welcome data considering all the adjustments forced on the industry this year. In terms of absolute numbers, marketings trend lower in the second half of the year, and that trend is holding this year, as well.

 

Placements were above a year ago also, up 5.9 percent. Larger placements might be seen in the light of sharply lower placements in March and April as response to corona virus effects. Kansas and Nebraska, two of the big three feeding states, had placements up 12.6 and 13.2 percent, respectively, over a year ago. Placements were lower in Texas, down 3.2 percent. Eighty-four percent, 104,000 out of 124,000, of the increase in placements were in the heaviest categories, over 700 pounds. The largest share of heavier feeder placements went to Nebraska followed by Kansas. Texas placed fewer cattle in every weight category except the lightest, under 600 pounds. More heavier cattle placed likely indicates some pressure on marketings and slaughter late this year into early next year. For the year, feeders have placed 510,000 fewer (3 percent) head on feed this year than last year.

 

The combination of placements and marketings left cattle on feed a record large, for October 1, 11.717 million head. That was 429,000 head more than last year. Within the state data, Texas had 70,000 more on feed in the drought year of 2011. Nebraska had 20,000 more on feed in 2018. October on feed numbers appear to be historically large in states like California and Colorado.

 

Nationwide, placements tend to peak in October. Drought conditions will likely play an important part of placements this year. Difficult wheat pasture establishment and development may force more to feedlots. Drought in the West and Texas may force some more placements. More feeder cattle continue to come from Mexico adding to available supplies for placement.

Video: Did Bears Win Thanksgiving, Will Bulls Get Christmas?

Did the bears win Thanksgiving (although this week had green on the screen), and will the bulls get Christmas? Bears won thanksgiving thanks to a USDA Nov crop report dud that stalled the bullish grain momentum for a brief period. But a bullish lower yield surprise in the Dec crop report could reignite the rally.
2026 U.S. winter wheat planting is nearly complete at 97% while crop conditions improved by 3 points to 48% good-to-excellent. US corn & soybean harvest is complete.
High corn demand, which is off the chart, and more Chinese soybean demand could support a Christmas rally.
Nasdaq had it’s worst November since 2011.
A U.S. Fed rate cut in December will help fund flow and sentiment.
Bitcoin held a long-term support at 80,000 and that's positive for fund flow and sentiment. It should help stock prices and Ag as we go into December.
Fertilizer prices continue to climb as we look ahead to 2026. Farmers may rely more on the nutrients that they already have in their soils.
South American Weather remains critical as the soybean reproductive stage starts from late Nov to late Feb depending on planting date.
Will a Russia-Ukraine peace deal happen by year-end?
CFTC data as of showed more managed money fund sell-off as of October 14th.