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Agricultural News


Trade Low-Balls Expectation for Placements in Latest Cattle on Feed Report, Inventory Total Up 8%

Fri, 26 Jan 2018 16:20:56 CST

Trade Low-Balls Expectation for Placements in Latest Cattle on Feed Report, Inventory Total Up 8% On Friday, the United States Department of Agriculture released its first Cattle on Feed report for the year, based on figures collected during December 2017. Radio Oklahoma Ag Network Farm Director Ron Hays reached out to Oklahoma State University Extension Livestock Market Economist Dr. Derrell Peel for his initial reaction to the numbers found in this report. Listen to Peel’s full analysis with Hays, by clicking or tapping the LISTEN BAR below at the bottom of the page.


“There’s nothing in general that’s a major surprise in this report,” Peel remarked. “Placements are a little bigger than anticipated, but the marketings were pretty close to expected. I don’t know that this will provoke much action or not.”


According to Peel, December Placements were shown in the report to be up 0.8 percent than the previous year. Fed Cattle Marketings in December were listed as being down 1.4 percent year-over-year, which leaves the January 1 on feed total to be 8.3 percent bigger than one year ago.


“We are certainly seeing the results of herd expansion the last couple of years with this on feed inventory continuing to grow,” he said.


Peel says this report confirms that the industry will be hit with bigger supplies coming through the pipeline this year. However, looking at the report’s breakdown, the number of heifers on feed has continued to inflate, up to 15.9 percent year-over-year. Peel says this suggests that herd expansion is slowing down.


Moving ahead, Peel insists that demand will be a key factor in how much price pressure the industry will face in 2018. He estimates that beef cow numbers for the beginning of the year will come in at around 1.8 percent larger than one year ago and the total cattle inventory up by 2 percent on a year-over-year basis, at approximately 31.8 to 32 million head. Those predictions will be confirmed in the upcoming Inventory report from the USDA.


Prices have held up reasonably well, especially given the large supply on hand, but Peel says that is thanks to a surprisingly robust demand in export markets this past year. He says the numbers in this report are probably near all that the industry can handle - unless demand continues to impress further. China’s burgeoning market could be a major factor in that prospect.


For a look at this report from USDA, click here.



   




   

Listen to Derrell Peel offer his full analysis of this report to Ron Hays, by clicking or tapping below.
right-click to download mp3

 

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