USDA is set to release its October 1 Cattle on Feed report Friday at 14:00 (CT). This set of data will include all cattle on feed as of October 1 (naturally), as well as marketings and placements for September.

September Marketings

  • A look at the daily chart for October live cattle (slide 1) shows the futures contract traded trended up during September.
    • The August 31 close was $180.825
    • Before dropping to a September low of $179.50 on September 5
    • and rallying to a high of $187.575 on September 28
    • before closing the month at $184.20
  • The cash index stayed strong as well, closing September on its high of $184, up $5.00 from its August settlement.
    • While the boxed beef market weakened
      • with choice down $13.01
      • and select off $13.25 for the month
  • My takeaway: I would not be surprised to see September marketings below the 1.884 million head (mh) reported for August.

September Placements

  • The February-April futures spread (slide 3) firmed over the course of September, moving from the end of August settlement of (-$3.825) to its September close of (-$3.00).
  • My takeaway: This indicates the number of cattle to be priced against the February contract, including those placed during September (four months on feed would theoretically have the cattle coming out in January), decreased during September. This implies placements may not have kept up with marketings last month.

October 1 On Feed

  • The December-February  futures spread (slide 2) continued to weaken during September,
    • This spread closed August at (-$4.05) and September at (-$4.575)
  • My takeaway: I’m looking for cattle on feed to increase from the September 1 number of 11.094 mh. How? Large placements during August and lower marketings during September.

You’ll notice I don’t compare back to last year, like the rest of the industry. First, it won’t shock you that I do things differently, and Second, I do it this way because I think comparing back a year is silly.