Cattle Buyers Weekly: USDA Will Release Jan COF Report

USDA will release its delayed January 25 Cattle on Feed report on February 22, which will provide a base for analysts to make more accurate forecasts for the February report. That report, due February 22, will be released March 8. USDA’s annual cattle inventory report, due to be released last Thursday, will be released February 28.

The report will show that beef cattle numbers grew much more modestly in 2018 than in the prior four years but that herd expansion continued. Expansion of the beef cow herd might actually pick up again this year because of excellent grass condition in the major cow-calf states, say analysts. This would reduce the number of cattle available to be placed on feed and thus tighten the fed steer and heifer supply, they say. The new release dates are contingent on the federal government not incurring a second partial shutdown.

The partial shutdown, which ended January 25, caused USDA to miss releasing 62 reports, says American Farm Bureau Federation economist Veronica Nigh. These included some that the meat and livestock industries use to gauge the direction of prices, supply and demand. Among those were the COF report, the monthly cold storage and monthly World Agricultural Supply and Demand Estimates (WASDE) reports.

The biggest miss was the January edition of WASDE, she says. In addition to projecting supply and use for grains and other crops, the report also foretells the same for red meat and poultry production for the 2017-2018 marketing year for both the U.S. and international markets.

USDA’s Economic Research Service will fold data intended for the January report into the February 8 edition, says USDA chief economist Robert Johansson. USDA however has so far made no mention of if or when it will publish the cold storage reports that have been missed.

Lack of a January 25 COF report did not prevent analysts from reviewing numbers based on their estimates. The Jan 1 COF total would be the largest since 2012, says Andrew Gottschalk, HedgersEdge.com. It is worth noting that on January 1, 2018, the total was 884,000 above January 1, 2017. During 2018, steer and heifer slaughter was up only 528,000 from the prior year. Front-end fed cattle supplies thus continue to be carried over and increased into 2019. Placements for December at 1.867M head would be up 3.8% from the prior year. This would represent the largest December placements since 2005, he says.

Marketing Rate Was Lowest Since 2012

December marketings fell short of expectations and were calculated to be 1.889M head, down 0.3% from the prior year, says Gottschalk. The resulting marketing rate at 14.9% (marketings versus COF) would be the lowest since 2012. Under normal feeding conditions, this would be very alarming. But adverse winter feeding conditions have minimized the impact of the resulting front-end supply. While this supply is numerically large, feeding performance slowed and out-weights have offset much of the near term increase in the front-end supplies, he says.

By the spring, excellent grazing conditions in beef cow country might encourage more aggressive withholding of heifers, says Gottschalk. This might negate the projected increase in the available feeder cattle supply for feedlot placements. Approximately 10% of the beef cow herd is in a drought region at this time, in sharp contrast to more than 50% this time last year. Heifer placements and cow slaughter are expected to decline as a result, until fall culling occurs. This should prove supportive for calf, feeder cattle and cow prices.

Adverse feeding conditions can mitigate the impact of larger supplies near term, he says. But it does not eliminate these supplies. The only way to eliminate them is by increasing weekly slaughter. As such, marketings will be deferred for some cattle into the late spring and summer period, he says.