Bullish Cattle on Feed Report Hints at Herd Expansion
Bernt Nelson
Economist
Chad Smith
Associate News Service Editor, NAFB
The recent Cattle on Feed Report indicates the U.S. cattle herd may be rebounding. Chad Smith reports.
Smith: After several years of contraction, there may be some indicators that the U.S. cattle herd is rebounding. Bernt Nelson, an economist for the American Farm Bureau Federation, says the March 1 Cattle on Feed Report has an interesting story to tell.
Nelson: The USDA estimates there were a little bit over 11-and-a-half-million head of cattle in the U.S. in feed lots on March 1. This number’s down about two percent from last year. Placements, that's where the real story starts to unfold here. Placements came in at 1.55 million head, down a whopping 18 percent from last year, and so that starts to ask the question, could this be a sign of some herd expansion?
Smith: Livestock markets responded accordingly to the release of this report.
Nelson: Overall, this was a pretty bullish report. Futures markets rallied early on, with several contracts hitting new highs before they kind of fell off. There's still a lot of fundamental uncertainty in the market surrounding where the economy is headed. When you add this in, the prospect of tariffs, export uncertainty, that's more demand uncertainty. This has led to a pretty high level of volatility in futures.
Smith: Nelson says we’re headed into peak demand for beef with the summer grilling season on its way, and prices at the grocery store may be impacted.
Nelson: But when we see placements of cattle on feed dropping now, that means we're going to have fewer cattle available later for marketing in the summer, and this has the potential to tighten beef supplies even further as we kind of go into grilling season. And this means that consumer demand is going to be the key puzzle piece dictating where prices go.
Smith: Chad Smith, Washington.
