Cattle on Feed Report: A little more bullish than expected

The data is mildly friendly compared to pre-report expectations, with all three categories on the bullish side of the average trade estimates.

Feedlot
Feedlot
(Shelby Chesnut)

USDA estimated there were 11.7 million head of cattle in large feedlots (1,000-plus head) as of Feb. 1, down 505,000 head (4.1%) from year-ago and 68,000 head less than the average pre-report estimates implied. That was the smallest Feb. 1 feedlot inventory since 2019. January placements declined 3.6%, while marketings rose 4.2%.

Cattle on Feed Report

USDA
(% of year-ago)

Average Estimate

(% of year-ago)

On Feed on Feb. 1

95.9

96.5

Placements in January

96.4

97.1

Marketings in January

104.2

103.9

Placements declined in each weight category compared with year-ago, with lightweights (under 600 lbs.) down 3.6%, 6-weights down 5.6%, 7-weights down 1.8%, 8-weights down 2.9%, 9-weights down 4.8% and heavyweights (1,000-plus lbs.) down 7.1%. Of the 72,000-head decline in placements compared to January 2022, Nebraska accounted for 45,000, Colorado 35,000, Texas 10,000 and “other states” 2,000. Kansas placed 20,000 more cattle on feed during January than last year.

The data is mildly friendly compared to pre-report expectations, with all three categories on the bullish side of the average trade estimates. But the real bullish aspect of the report is the decline in feedlot numbers – and the limited number of calves to move into feedlots in subsequent months. Packers will be competing for a tightening supply of market-ready cattle throughout 2023.