The cattle markets took a tumble last week after the United States Department of Agriculture (USDA)’s Cattle on Feed report surprised traders with higher than expected cattle placements.
September cattle placements were up six per cent compared to last year, and four per cent above the five-year average. Traders were only expecting a two per cent increase, explains Anne Wasko of the Gateway Livestock Exchange,
“We’ve seen a really tough week on futures,” she explains, while noting that December live cattle futures fell from $187 last Thursday prior to the report, down to $179 by last night’s close.
The numbers indicated that more cattle were placed on feed even earlier than expectations.
“Logistically, and mathematically it will mean less cattle later,” she explains.
Western Canada also saw higher than expected cattle placements according to the October Cattle on Feed report. Placements were up four per cent compared to last year in Canada, notes Wasko. From June through September, Canadian placements were up a sizeable 23 per cent compared to the previous year. Both the U.S. and Canada saw record prices draw more cattle into feedlots, combined with drought conditions, prompting earlier marketing.
Looking ahead, feedlot capacity could match the increased supplies, but as Wasko cautions, beef demand will be a bigger question mark given high retail prices. For cattle producers with inventory, Wasko advices that smaller supplies are still expected in 2024 after the bunched up placements this winter fill the pipelines.
December prices however are still remaining historically high, according to Wasko, with live cattle futures still around $40 above the five-year average, even after last weeks’ declines. (see chart)
Check out the full Beef Market Update, below: