August 1 Cattle on Feed Report Comments

The latest cattle on feed report released by USDA on Friday showed a feedlot inventory of 10.6 million head. This is a 4.3 percent increase over August 1, 2016, and is the largest inventory for August since 2012. In total, there are an estimated 439,000 more head of cattle in feedlots than at this time last year.

Placements were up 2.7 percent year-over-year which fell below the pre-report estimates. However, this value was still within the range of estimates and should not be viewed as a surprise. This is the first year since 2007 that placements in July were lower than placements in June. Remember June saw a 16 percent increase in placements over last year. It is very likely that the aggressive placements in recent months pulled some cattle forward that would have otherwise been placed during July.

Marketings were reported to be up 4.2 percent over last year – very much in line with pre-report estimates. The rate of marketings is still aggressive by many measures. However, as shown in the figure above, the number of market-ready cattle (measured as on-feed over 120 days) increased over last month. This number is still below 2016 levels, but it is still worth monitoring over the next few months as more supplies come through the system. If a large amount of market-ready cattle begins to build-up in feedlots, this would be a negative influence on the market outlook.

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