USDA's Cattle on Feed report shows larger than expected drop in placements

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USDA’s monthly Cattle on Feed report today may boost live cattle futures next week, as May placements dropped well-under trade expectations, signaling tighter animal supplies later in the year.

An estimated 1.869 million head of cattle were placed in feedlots during May, down 2.1% from last year and below the average analyst estimate for a decline closer to 0.4%.

USDA estimated U.S. feedlot inventories as of June 1 at 11.846 million head, up 1.2% from the same date in 2021 and slightly under expectations for a 1.4% increase.

May marketings at 1.914 million head came in 2.4% over the comparable year-ago result, while a 3% rise was expected. This figure likely disappointed market bulls, since May 2022 had one more workday than did May 2021, which often translates into an annual increase of 4%-5% in the monthly marketings figure.

The number also suggests producers did not market cattle as aggressively as they might have, thereby leaving a relatively large number of market-ready cattle in feedlots to start June. This may keep the expiring June contract from opening strongly next Monday.

August live cattle fell 50 cents today to $133.375, down $3.20 for the week.


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