CME: Cattle Inventories in Feedlots Up from a Year Ago

 A month earlier, inventories were up 1.1 percent, on a year-over-year comparison. The expansion in inventories stemmed from a 5 percent increase in cattle moving into feedlots during November when compared to the same month in 2018 and followed a 10 percent increase in October.

Placements in November exceeded the expectations of industry analysts that expected placements to be up only 1 percent, on average.

Marketings of cattle from 1,000 head capacity feedlots in November were down 3 percent from a year earlier, in line with expectations.

Even though marketings were down, there was one less marketing day this November than in November 2018, so marketings per day increased from November 2018. Marketings per day during September and October had fallen short of a year prior.

Marketings have been well balanced against inventory. Inventories of cattle on feed longer than 120 days on 1 December were up from a year earlier by 98,000 head.

A month earlier, inventories were up 87,000 head. The modest increases relative to a year ago do not seem to reflect restrained packer interest in buying cattle as Choice steer prices have moved up 14 weeks in a row as of this week.

Inventories of cattle on feed ranging between 90 to 120 days are tightening, which could be supportive for cattle values in the late winter and earlier spring. That component of feedlot inventories has been running below a year earlier since 1 September.

The 1 December count of 90-120 day cattle on feed was down close to 10 percent from a year ago.

April live cattle futures are trading close to $127 in recent days compared to $124.50 in mid-December 2018.

The premium to the December futures contract is about $4, currently, similar to a year ago, but down from a $5 premium a month ago.

The strength of the cash cattle market in recent weeks has made it difficult for deferred contracts to maintain the premiums that existed in prior weeks.

The larger placements of cattle into feedlots was highlighted by a 13 percent increase in placements weighing less than 600 pounds. This weight group accounted for 70 percent of the total increase in placements during November.

Excluding the increase in light weight cattle, placements would have only been up 1.8 percent, which was in line with pre-report expectations.