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Vol. 11, No. 17 / January 24, 2013
USDA’s monthly Cattle On Feed report will be released Pre-Report Estimates -- USDA Cattle On Feed
on Friday afternoon and the analysts surveyed by DowJones
Friday, January 25, 2013
expect, on average, a year-on-year increase in placements for
the first time since May. Should that indeed be the case, Decem- Average of
Range of Estimates
ber would mark only the third month among the last 12 in which Estimates
placements have exceeded year-earlier levels. The table at right (Percent of year ago)
suggests that there is a great deal of disagreement among analysts On Feed, January 1 94.2 - 96.2 95.6
regarding December placements with the spread ranging from 96.2 Placed in December 96.2 - 108.8 104.1
to 108.8 but readers need to know that the 96.2% estimate was the Marketed in December 90.2 - 95.0 93.2
only one below 100% among 10 responses to the DowJones survey. Source: DowJones
The next lowest estimate was 102.5 so there was more agreement
among analysts that is suggested by the large range. As is their usu- U.S. CATTLE PLACED ON FEED
al practice, DowJones drops the highest and lowest numbers from Change vs. Yr. Ago
Thous. Head
each range in calculating their averages so neither the 96.2% nor 600
108.8% estimates impacted the 104.1% average.
These estimates imply that December placements will num- 400
ber 1.742 million head. Should that be the figure in Friday’s report, it
would mean that U.S. feedlots with capacities of over 1000 head 200
placed a total of 1.416 million fewer cattle in 2012 with 1.278 million
head of that reduction coming in the second half of the year. The 0
annual reduction in 2012 would be the largest on record for the cur-
rent cattle on feed series which dates back to 1996 — with the one -200
exception of 2004, a year that was greatly impacted by the discovery
of BSE in the U.S. in December 2003. Roughly 800,000 fewer cattle -400
have been placed over the past 4 months.
Cattle feeding margins remain negative — and have been -600
so to a historic degree for 21 months according to the Livestock Mar-
keting Information Center in Denver. The chart at right show com-
puted breakeven levels and steer prices from 2004 forward. Estimat-
ed losses hit a record of $314/head last July when feeders were CHOICE STEER PRICE vs BREAKEVEN
forced to feed very expensive feed to very expensive feeder cattle $ Per Cwt
Cattle Feeding, S. Plains, Monthly
placed earlier in the year. Things have gotten better but losses in
November and December were still estimated to be in the $120/head 145
range. As we have pointed out before, these LMIC cost estimates 135 Steer
Price
include full yardage charges and markups on feed such as would be
125
charged for custom-fed cattle.
Things are not expected to get better for cattle feeder in the 115
Breakeven
near future. LMIC’s projected breakeven costs for February is 105
$143.67/cwt. live. The figures for March and April are $142.63 and
95
$145.87, respectively. Feb Live Cattle futures closed yesterday at
Projected
$125.775/cwt. while April closed at $130.45/cwt. The cattle placed in 85 Breakeven
December will for the most part be sold against June and August
75
futures which closed at $126.625 and $127.525 on Wednesday. 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
One factor that could positively influence cattle prices
in 2012 and beyond would Japan allowing imported beef to raised to 30 months on February 1 if a medicine and food panel ap-
come from cattle older than 20 months — and that change may prove it at a January 28 meeting. The change would expand the
be coming soon. Of course, we have heard that story several times pool of cattle from which Japanese exports could be drawn. It would
over the past couple of years but Reuters reported on Tuesday that apply to cattle from Canada, France and the Netherlands as well.
the Japanese Health Minister said last week that the limit would be
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