Friday afternoon’s monthly USDA Cattle on Feed report revealed a larger than expected placement total at 99.2% of year ago, above even the high end of the estimate range. However, at 1.525 million head, this is still a historically low placement total and marks the sixth consecutive month of below-year-ago placements. Our model now projects fed cattle marketings to move below year ago through at least May. At face value, the miss on placements, alongside a slightly smaller than expected marketings total and a larger than expected on feed count, might be worth $1/cwt to futures this morning, but perhaps the bigger news Friday afternoon came in the cash cattle trade where this bearish-looking COF data failed to trip a lower trade. Packers found some trade in the North at $133 and paid mostly $135 in the South, actually $1 higher than the prior week’s market! This would be $3 above nearby Feb futures when average basis this time of year is closer to +$1. Despite the USDA data, we’ll look for a firmer start across futures this morning.
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