Department of Agriculture and Resource Economics, Colorado State University

By: Stephen R. Koontz

USDA Cattle on Feed Report for September

The USDA NASS Cattle on Feed report for September was released last Friday.  My take on the report is that it is reasonably bullish.  The fear and panic that impact cattle markets after the news of the fire at, and temporary closure of, the Tyson Finney County Plant has not much abated over the past 6 weeks.  The Cattle on Feed report communicates that the market is adapting to the situation and it appears to me that there is no overwhelming bad news in the report – or other supporting USDA reports.

Cattle on feed for the slaughter market in the United States for feedlots with capacity of 1,000 head or more head totaled 10.982 million head on September 1, 2019.  The inventory was 1.3% below September 1, 2018.  This is modestly fewer cattle than were anticipated prior to the report but well within the range of estimates by traders and analysts.  Cattle on feed over 90 days and over 120 days were well above last year, and are uncomfortably large, but both appear to be following the typical seasonal declines.

Marketings of fed cattle during August totaled 1.953 million head, 1.5% below 2018.  These are strong marketing as the numbers in 2018 was huge.  Expectations were for a decrease of 1.7% below the prior year so the marketings were very modestly better than expected but well within the range of expectations.  Placements in feedlots during August totaled 1.884 million head, 9 percent above 2018.  Pre-report expectations were for placements to be modest and 5.7% below the prior year.  Actual placements were more modest than expected and at the low of the range.

Feedlots marketed reasonably aggressively and placed very modestly through August.  From the cattlemen’s perspective, this is exactly what was needed.  We’ll see how the futures and cash markets react through the trading week.  The weekly Livestock Slaughter reports confirm one of the big concerns: steer and heifer carcass weights have increased 15-20 pound per head over the past 6 weeks.  This increase is typical during the late summer, but weights are still below last year and do not appear to have been too exacerbated by the plant closure.  Much will be said about packer margins for August and the remainder of 2019.  The live-to-cutout spread jumped to just below $500 per head.  This is well above the very strong May-June peaks during 2018 that were close to $400 per head.  The plants that are open and running are making exceptional money.  (As are likely the employees getting paid bonuses and overtime.)  Saturday slaughter volumes are rather high and will likely remain so through October.  Which reminds me, we still have October to go to get through this beef tonnage.

The Markets

What do the technicals say?  Live cattle and feeder cattle futures punched down sharply for two days in early September and then rallied the following two days.  The volume of contracts traded in this time period was two-to-three times typical volumes.  Needless to say, there is a lot of uncertainty with people and firms wanting to get rid of some risk and other people and firms willing to take it on.  The markets gapped down following the news about Tyson’s Finney County plant.  Feeder cattle have recently filled that gap.  The recent plunge and rally have the appearance of the market exhausting the down move.  But looking for a clear technical picture without substantial good news on the fundamental side is wishful thinking.  The recent Cattle on Feed report was reasonably good news but not that good.  The clear worrisome thing regarding live cattle futures is the strong premium in deferred contracts relative to nearby futures and cash.  This discourages timely marketing and tends to create problems down the road.


Week of

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Data Source: USDA-AMS Market News




5-Area Fed Steer all grades, live weight, $/cwt




all grades, dressed weight, $/cwt




Boxed Beef Choice Price, 600-900 lb., $/cwt




Choice-Select Spread, $/cwt




700-800 lb. Feeder Steer Montana 3-market, $/cwt




Nebraska 7-market, $/cwt




Oklahoma 8-market, $/cwt




500-600 lb. Feeder Steer Montana 3-market, $/cwt


Nebraska 7-market, $/cwt




Oklahoma 8-market, $/cwt




Feed Grains Corn, Omaha, NE, $/bu (Thursday)




DDGS, Nebraska, $/ton



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