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CME: No Backlog of Over Finished/Fed Cattle in Feedlots

17 June 2019

US - Indications are that the US cattle feeding sector is "current", that is, animals have been marketed in a timely manner, and there is not a backlog of over finished/fed animals in feedlots, reports Steiner Consulting Group, DLR Division, Inc.

That conclusion is based on weekly dressed weights in conjunction with quality grade data compiled by USDA’s Agricultural Marketing Service (AMS).

The seasonal pattern in cattle (e.g., steer) dressed weight is pronounced, and the long-term trend is heavier. To a large extent, seasonality is driven by the weight and age (calf versus yearling) of animals when placed on-feed.

The seasonal low occurs when abundant supplies of calves placed in the fall month are being sold to packers who are supplying beef for spring grilling. But, year-over-year declines, as happened earlier this year, can be caused by severe winter weather and/or excessively muddy conditions.

Also, marketing rates are associated with dressed weights. For example, in much of 2017 and 2018, higher marketing rates kept weights from increasing on-trend.

For the week ending 1 June (latest data available), US Federally inspected (FI) steer dressed weight was down nine pounds yea-rover- year and unchanged compared to the prior week (see the graph below).

Steer weight is at or near its seasonal low but has occurred three to four weeks later than usual. Heifer dressed weights are similar to steers, note that the seasonal bottom usually happens two to four weeks after steers.

In the latest data, FI heifer dressed weight dropped by seven pounds year-over-year and by six pounds week-over-week (see the following graph).

In the olden days, yield grade data were used as an indicator or component when evaluating whether feedlots were current or not. However, those data are no longer reported to the AMS by most packing plants and are not representative of the bulk of fed animals being harvested. So, we rely on the quality grade data.

After adjusting for the trend of more cattle grading Choice and Prime, a lower percentage tends to indicate fewer days on-feed and rather aggressive sales. A sizeable above-trend increase often is the result of a backlog of market-ready animals.

Nationally, the latest data (week ending 1 June) on the percent of beef graded Choice was 70.2 percent, which was just over one percent below a year ago and was the fourth consecutive week below 2018’s.

The Prime percentage has been increasing proportionally more than Choice. In the latest data, 7.2 percent was Prime; that was 0.9 percent above a year ago but was the smallest year-over-year gain in five weeks.

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