Placements Land on High End of Estimates in Latest On Feed Report- Cash Markets Brace for ImpactMon, 26 Mar 2018 11:56:44 CDT
The US Department of Agriculture, on Friday, released its latest Cattle on Feed report for the month of March. As expected, large numbers were seen across the board, even on the high end of the expected range. Don Close of Rabo AgriFinance was in Fort Worth this weekend presenting at the Texas Southwest Cattle Raisers Association Convention, where Radio Oklahoma Ag Network Farm Director Ron Hays had the chance to get his reaction to this report.
According to Close, a major influence on this report began back in September when a large number of cattle began to be forcibly placed due to the availability, or lack thereof, of wheat pasture. “I think we’ve really pulled cattle forward and as a result of that - into the summer, I think we’ll see placements below year-ago levels,” he said. “I think it will balance out.”
Initially, Close says he was concerned with the August - October period particularly regarding the carcass weight of those cattle placed early on. But, he asserts that since so many calves have been placed so early, that concern must be shifted forward to even later this summer and suggests the market will feel a “double-whammy” of the impact from this situation as it plays out. For this reason, Close insists keeping both domestic and export demand strong is critical.
“We’re no longer in a situation where we can eat our way out of this thing, domestically,” Close remarked, adding that this will likely hurt the price of finished cattle - at least on the cash side - but believes there is little downside left for the futures market to go. Luckily, though, he says we are approaching the summer grilling season and an early Easter which will hopefully help to keep product moving.
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