USDA August Cattle on Feed Report Run-Down with Derrell Peel

Senior Farm and Ranch Broadcaster, Ron Hays, is talking with Oklahoma State University Extension Livestock Market Economist, Derrell Peel, about the latest cattle on feed numbers in the USDA August Cattle on Feed Report released this past Friday.

The August Cattle on Feed Report, Peel said, showed that placements in the month of July were 101.8 percent of last year’s level. Marketings, he added, were 96 percent of last year’s level.

“That gives us an August 1 cattle on feed inventory at 101.4 percent,” Peel said. “So, up one point for four percent year over year.”

With placement numbers being higher than a year ago, Peel said the expectations were for about 3 percent less.

“The fact that we’ve got such drought conditions, and this is really drought driven I think because the drought is forcing us to do things we don’t necessarily want to do, that is what we are seeing here is the drought forcing cattle to move into the market sooner than we planned,” Peel said.

If you look at the weight break downs, Peel said, it is the exact same pattern we have had for the last two months.

“Placements of cattle under 700 lbs. were up 9.5 percent, and placements over 700 lbs. were down 2.5 percent,” Peel said. “So, the net effect was that two percent increase in placements, and it is the exact same pattern we have been seeing with these lightweight cattle coming in and I think they just don’t have an option but to go ahead and market these cattle.”

By continuing the process of pulling cattle ahead and borrowing against the future, Peel said placing them sooner than later will imply that eventually low cattle numbers will result.

The report also reflects quality yearling cattle numbers are tight.

“We are seeing very strong prices for the heavier weight feeder cattle,” Peel said. “They normally go up through the summer, but they have gone up even more than that. I think that reflects the general tightness of cattle supplies in general, but specifically that weight group.”

Even the calves have gotten a little stronger, Peel said, kind of counter-seasonally in the last three weeks.

“We are also seeing on the other end of things, large numbers of cull cows still coming to town,” Peel said. “Cow slaughter is running big, and those prices have stayed quite strong through all of this.”

For about two weeks in the middle of July, Peel said it looked like we might overwhelm the markets. For a short-term basis, he added, the markets did become overwhelmed, but they bounced back.

“There have been some new buyers in the market snapping up these supplies, and so even though the volumes continue fairly strong, the prices bounce right back to really prior levels, and they have been remarkably strong for most of the year except for some of this volatility short term,” Peel said.

To view the August Cattle on Feed Report from USDA, click here.

Click the LISTEN BAR below to listen to Ron Hays and Derrell Peel on the USDA August Cattle on Feed Report.

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