More COF Still?

More cattle on feed than a year ago late in 2023 was a factor in falling fed and feeder cattle prices.  USDA will release its January Cattle on Feed (COF) report on Friday.  This SAT takes a look at what we might expect in the report.

There is a group of market analysts that do COF “pre-report” estimates of their expectations for the report. Analysts pre-report estimates are published in major business outlets and industry newsletters.  These are my estimates of what I expect in the upcoming report.  

I expect December marketings to be about 99.4 percent of last year.  Marketings have been below the previous year since May and their decline has been a source of concern for some.  But, fewer cattle marketed is related to fewer cattle on feed and a slowdown in Saturday fed cattle processing by meat packers.  

My estimate for December placements is 98.0 percent of last year.  Placements typically decline sharply during the last couple months of the year and this year should be no exception.  The various data points that many analysts use offer a mixed bag of information.  The number of head sold that are used to calculate the CME feeder cattle index was about 2.5 percent lower in December compared to last year.  But, feeder cattle imports from Mexico were up about 7,000 head and the sales receipts data from USDA were up almost 14 percent. Improvements in wheat pasture conditions may have held some more feeders in the country.  Lower fed cattle futures market prices and some unprofitable closeouts for unhedged cattle may help to hold back placements.

Placements a little bit bigger than marketings means that the estimated number of cattle on feed on January 1st remains at about 102.5 percent of last year.  More cattle on feed remain with us for the time being.  Slower marketing rates means more days on feed and likely heavier weights although, this latest winter storm may slow weight gains and reduce dressed weights. 

While the COF report is only focused on feedlots for cattle ranchers in the South, that’s where most of the calves head after weaning.  The report does give some insight into near term cattle and beef supplies and some direction for prices in coming months.

Anderson, David. “More COF Still?Southern Ag Today 4(3.2). January 16, 2024. Permalink