The latest USDA cattle on animal feed report, published On May 21, the number of animals fed on May 1 is 4.7% higher than a year ago. The report provides monthly estimates of the number of cattle fed for slaughter. For the report, the USDA is investigating feedlots of 1,000 head or more, as that represents 85% of all fed cattle. Cattle producers provide data on inventories, placements, marketings and other disappearances. It’s important to remember that due to the disruptions of COVID-19 last year, typical year-to-year comparisons need to be contextualized.
May Cattle Report
This report showed a total inventory of 11.725 million head in the United States on May 1, up from the same period in 2020 but down from last month, and down 0.7% from compared to 2019. This 4.7% increase is slightly higher than analysts’ expectations. Feedlot inventories increased 3.9% from a year ago. This report marks the second-highest inventory in May since the series began in 1996.
As usual, Texas, Kansas and Nebraska have led the way when it comes to total feeder numbers, accounting for almost 8 million head, or about 68% of the country’s total cattle inventories. All three posted year-over-year increases, ranging from 5% to 7% more than in 2020.
While total inventories are an important part of the report, other key factors include placements (new animals are placed in feed) and marketing (animals being removed from feed and sold for slaughter). At 27.2% above 2020, April holdings exceeded analysts’ average expectations of a 22.5% increase. The very wide range of investment forecasts – 22% – highlights the uncertainty in forecasting this specific variable while trying to account for the disruptions at this time last year. Drought conditions are leading to record levels of poor grazing conditions, which could lead to more feeder cattle in feedlots. However, higher feed costs due to corn and soybean prices will make things more difficult for feeders for the foreseeable future. Another factor to consider in the number of higher placements was the higher levels of feeder cattle imported from Mexico for the period. In April, placements reached 1.821 million head, 389,000 head more a year ago, but about 1% lower than in 2019.
Marketings reached 1.938 million head, 32.8% more than last year. This fits perfectly with analysts’ average expectation of a 33% increase from levels a year ago. Marketing also had a decent range of expectations in this report (albeit much smaller than the range of investment estimates), with analysts’ forecasts ranging from a 29% increase to 36.4%. We are still seeing higher levels of heavier cattle fed compared to the normal history, although it is expected to be down from last year, when cattle were retreating through the system in due to packaging constraints.
This May Cattle on Feed report is viewed as relatively neutral to bearish due to higher than expected holdings. While the level of the increase in investments would normally be extremely bearish news, year-to-year comparisons should largely be avoided due to last year’s disruption. The overall supply of cattle for food is up almost 5% from last year but almost 1% below 2019, and the number of animals marketed in April is well above that of a year ago, but in line with expectations. The attention of many producers will now turn to weather conditions, as dry conditions as the grazing season approaches lead to record levels of poor grazing conditions. Add to that the feed costs driven by rising prices for corn, soybeans and hay, making it difficult for some producers to keep their animals out of the feedlot until they are heavier. , and the summer is likely to be difficult for some growers.