Cattle on feed inventory rises 1%, beef prices move higher

The March 1 Cattle on Feed report pegs feedlot inventories at 10.77 million head, up 1.01% from a year ago, according to the National Agricultural Statistics Service of the U.S. Department of Agriculture. The slow but steady increase in cattle supplies is a plus for meat processors like Tyson Foods.

February cattle advance sales and feedlot placements were up year over year partly because of an extra business day in February thanks to leap year. The advance sales (marketings) were up 5% percent with daily average feedlot marketings equal to year ago levels. Feedlot placements were 10% higher than the year ago levels, within a wide range of pre-report expectations.

The placement number is not as bearish as viewed by some. First, the extra day in February allows more placements during the month. Secondly, it was compared to a small 2015 value that was nearly 5% under the five year average. Nevertheless, it was up and was the first significant year over year increase in placements in two years, according to Darrell Peel, livestock marketing specialist with Oklahoma State University.

He said the larger feeder cattle supplies mean more cattle will arrive in feedlots and increased year over year placements will likely be the expectation for many months. He said the early spring contributed to the large February feedlot placements and may partially offset some March placements.

He said other signs of an early spring have been evident in the meat markets. Wholesale boxed beef prices increased impressively over the past two weeks with strength in middle meats (steaks) and wholesale ground beef beef sales suggesting early grilling demand which is also means higher beef prices for consumers.

Peel said price spread between wholesale and retail has widened to roughly $10 per hundredweight on choice cuts of beef. He said the wider margin doesn’t typically occur until late April or early May. Beef retail prices increased seasonally in February according to the latest retail data, while retail prices for pork, turkey and broilers all decreased.

He said the early Easter may impact seasonal meat demand in March. Easter occurs in March only once every four or five years on average. The last time Easter occurred in March was 2013 but the next time will not be until 2024.