The numbers in last Friday's USDA Cattle on Feed numbers came in about where market-watchers were expecting. Of little surprise were the total number of head on feed as well as cattle placed on feed. However, the report showed that there are more heavy cattle being placed on feed than had been expected.
USDA reported the number cattle on feed as of April 1, at 11.152 million head. That's down 4.6 percent from 2008's levels. It put March placements at 1.802 million head, up 3.8 percent from a year ago.
The report indicated that 31.6 percent of the animals placed on feed in March weighed 800 pounds or more. That compares to a 10-year March average of 25.3 percent..
"This could push down (cattle) prices in July or so, when that large number of heavy cattle comes to market," points out J.P. Morgan analyst Ken Goldman. He says prices could recover after that supply surge, however.
The continued placements of heavy cattle could keep market weights high (barring a feed price increase), according the CME Group's Daily Livestock Report. That would keep beef supplies up as well.
The CME economists note that along with the structural changes in the grading system, the supply of heavy cattle will contribute to solid availability of Choice grade beef "for some time to come."
Source: USDA, Meatingplace.com