February 26 Weekly Update

2/26 – In Friday’s Cattle on Feed Report, the USDA said new placements onto feedlots in Jan were 4.4% above a year ago. That follows 8.3% average monthly increases for Oct-Nov-Dec 2017. Total feedlot inventories on Feb 1 were 11.63M head, 7.9% higher than last year. Higher than expected placements are the result of a drought in Texas and Oklahoma that is forcing cattle off of winter wheat grazing. Lack of adequate pasture this coming spring could accelerate that herd liquidation. Heifers (on Jan 1) accounted for 4.15M head, up 16% percent from 2017. According to Feb’s Livestock, Dairy && Poultry Report, the USDA is projecting 2018 beef output at 27.7B lbs, 5.9% above 2017 levels. However, strong domestic and export demand is expected to offset the increase in supplies. USDA is projecting cattle prices to average $119.50/cwt in 2018 vs $121.53 in 2017.