More days on feed pushes feedlot supplies higher

By Trey Freeman, Ever.Ag

USDA’s monthly “Cattle on Feed” data was reported near trade estimates in all three categories.

On-feed cattle numbers as of September 1 came in at 100.6%, versus 100.9% expected. Marketed for the month of August came in at 96.4%, versus 96.6% expected. Placed for the month of August came in at 100.6%, versus 100.9% expected.

The on-feed number was the fourth highest on record for the month, behind 2020, 2021, and 2022. The current supply is largely a function of cattle being fed longer due to packers keeping kills low to prop boxed beef prices, along with cheap feed prices.

Cattle imports from Mexico and Canada have helped offset the short supplies so far this year, resulting in a year-over-year increase in the on-feed number. Cattle imports from Mexico and Canada are up 25% and 18%, respectively, through July. This is an additional 242,000 head imported for the first 7 months of this year, compared to last.

In general, we live in an ever more globalized cattle and beef market. Along with cattle being pulled from Mexico and Canada, beef imports are sharply higher through the year, compared to 2023. Beef imports are up over 20% through July, or 436 million pounds. Between Australia and New Zealand, beef imports are up 270 million pounds. Exports, resulting from a strong dollar and plenty of beef flooding the global market from Oceania and South America, are down 2.88%, or 52.5 million pounds, through July.

Cash markets were active Friday. In the South, cattle traded at $183.00/cwt. This is $2.00/cwt. higher than the previous week. Cash traded at $184.00/cwt. live and $290-292.00/cwt. dressed in the North. This is $2.00/cwt. and $2.00-$4.00 higher than the previous week, respectively.

Boxed beef came under pressure, with Choice finishing about $4.00/cwt. lower on the week at $300.67/cwt. Support comes in at $300.00/cwt. and then at $292.00/cwt.

Dressed weights reported Thursday showed steers eight pounds higher than the previous week and 24 pounds higher than a year ago. Heifers were reported to be four pounds heavier from the previous week and 21 pounds heavier than a year ago.

Heavier weights continue to offset lower slaughter numbers. Federally inspected beef production is down only 0.5% for the year through August, while slaughter is down 3.5%.

December live cattle closed $4.70/cwt. higher on the week at $183.20/cwt. December managed two consecutive closes above the 50-day moving average to finish out the week and managed to close over the 100-day moving average of $182.975/cwt. on Friday.

October feeder futures finished $4.775/cwt. higher on the week at $243.90/cwt. and closed above the 50-day moving average of $243.60/cwt. for the first time since mid-July.

The risk of loss trading commodity futures and options can be substantial. Investors should carefully consider the inherent risks in light of their financial condition. The information contained herein has been obtained from sources to be reliable, however, no independent verification has been made. The information contained herein is strictly the opinion of its author and not necessarily of Ever.Ag and is intended to be a solicitation. Past performance is not indicative of future results.