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Beef Buzz News


Derrell Peel Discusses the Significance and Importance of the Latest USDA Cattle On Feed Report

Tue, 27 Jul 2021 10:26:43 CDT

Derrell Peel Discusses the Significance and Importance of the Latest USDA Cattle On Feed Report ssued last Friday by the USDA, the quarterly cattle on feed report is significant, according to OSU Professor and Livestock Marketing Extension Specialist, Derrell Peel.

To review the complete Cattle on Feed Report for July, click here.

The report suggests we are tightening our supplies, which could change the leverage equation, Peel said.

This year, the story has been absolute numbers, Peel said. The first half of the year revealed we had too many cattle to get through packing plants in a timely manner, and we are currently working through those numbers, he added.

The reported stated cattle on feed is 98.7 percent of last year, down 1.3 percent. Placements were down 7.1 percent compared to a year ago.

Peel commented the placement numbers are a result of the odd patterns and bizarre volatility experienced last year because of the world pandemic.

“Nevertheless, the placements are going down, and that is the real story,” Peel said.

Peel said given that cattle numbers peaked in 2019, we should we working our way consistently into somewhat tighter supplies. This will help the cattle market get back on track, he added.

He also believes these latest report findings could be repeated in the upcoming reports as well, he said.

We were on track to this last year, but there was significant disruption, Peel said. This is what created all the problems experienced earlier this year, he said.

Now we are set to see cattle on feed inventory numbers down consistently going forward, barring any other unforeseen shocks to the system, Peel said.

“This is reflected in our price forecast, too,” Peel said. “We are looking for significantly stronger prices for the rest of the year and beyond,” he added.

Tighter supplies, which translates to leverage swinging back toward cattle producers, is also part of that.

There has been a disconnected between the fed cattle market and the boxed beef market, Peel said, due to the bottleneck problem. However, cattle numbers are naturally falling which shows producers not being bound by that constraint going forward, he said.

This will put the packers back in the market and these markets reconnecting like they should, Peel said.

This sets the industry up to benefit from the strong beef demand that is currently out there, Peel said.

As the industry continues to debate issues like transparency and price negotiation, the National Cattlemen’s Beef Association has provided a plan to up the number of negotiated cattle on a weekly basis.

Peel said most of the concerns are related to price discovery with this plan and the ability for markets to “do what they do.”

“I still believe markets work and they fix problems, but some people are upset they are not getting fixed the way they expected to.”

Click on the LISTEN BAR below to hear more from Derrell Peel.

The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR below for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
   
   

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