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Cattle on Feed Preview 11/21 14:35


Cattle on Feed Preview 11/21 14:35

By ShayLe Stewart
DTN Livestock Analyst

USDA Actual Average Estimate Range

On Feed Nov. 1 101.4% 98.2-102.5%
Placed in October 112.2% 96.2-119.0%
Marketed in October 99.6% 99.3-100.1%

November's Cattle on Feed report is expected to show a lofty
placements number since the October report showed placements up
a mere 2%.

USDA will release its Nov. 1 Cattle on Feed report at 2 p.m. CST
on Friday.

Analysts' projections for cattle placed on feed in October vary
a baffling 22 percentage points. But the fact of the matter is
that this comes as no surprise. Cattlemen knew that placements
were going to be up because: 1) The fall run took its time
heating up this year and more calves were traded in October than
in late September; 2) Given the market uncertainly fueled by the
Tyson Holcomb, Kansas, packing plant fire, cattlemen of all
sectors were leery of the market's condition and held calves on
grass for longer; and 3) Placement figures since June of 2019
have been lower (June down 3%, July down 2%, August down 2%,
September down 9% and October up 2%), and the market typically
doesn't see a negative placement pattern like this, so, at some
point, the cattle have to trade and be placed. It's obviously
given analysts figures that those cattle finally traded hands in
October.

But what kind of market impact will Friday's report have? The
funny thing is is that everyone has known for some time now that
this report would share lofty placement figures. If the industry
wasn't current and was struggling to sell beef products, then a
report like this would wreak havoc. But given that the world's
supply of protein is off-kilter because of the outbreak of
African swine fever in Asian countries and that the U.S. is
currently processing cattle at a vigorous speed and able to sell
that product off retail shelves at a rapid pace, this report
shouldn't cripple the market, though it may play on the
psychology of cattlemen.

The cattle market is already entering a correction mode from a
near-two-month rally. This report may cause a strong downward
trend in a couple of days after the report is released, but it
shouldn't have a long-term effect. The market's downside play
has been a long time coming.

ShayLe Stewart can be reached at shayle.stewart@dtn.com