031163 Cattle on Feed Up 3 Percent

The number of cattle on feed in large feedlots climbed to 11 million head as of Nov. 1, up 3% from the year-earlier level. This marks the first year-over-year increase in the feedlot inventory since April 2002. Cattle on feed at the first of October were down 2% from last year.

Market analysts had expected an increase in the feedlot inventory this month. However, placements were 3 or 4 points higher than expected at 16% above the year-ago level. Surprisingly, marketings were also about 4 points above expectations even though they were down 6% from last year.

Deferred cattle futures are trading about $15 below the current market in anticipation of large supplies ahead. Despite the big increase in placements, the report should be neutral to the spring 2004 futures contracts. Heavier than expected marketings will be positive for the December futures. However, market reaction early next week will also be influenced by the weather. The amount of snow from a winter storm in the forecast for the central and northern Plains this weekend will affect the size of the potential gain in the December contract.

Source: CropDecisions.com

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