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Feedlots' Plan: Hold Now, Sell Later?

posted on November 19, 2004


Congress this week approved a one-year extension of the mandatory price reporting system administered by USDA. The purpose of the program is to provide price transparency for livestock farmers ... and, in turn, to help hog, cattle and lamb producers develop market strategies.

The program, which had lapsed in October, has widespread support in livestock industries. In fact, packers have been reporting the prices they pay for livestock voluntarily since the mandated reporting expired last month.

Price trends are critical to producers who depend on a variety of information to market their goods. That also includes government data like Friday's cattle-on-feed report.

Feedlots' Plan: Hold Now, Sell Later? USDA numbers released late Friday indicate the cattle industry continues to hang on to its livestock.

The November 1 inventory shows the number of cattle on feed at 103 percent of a year ago ... the number placed at 97 percent ... and the number marketed at 97 percent.

Analysts say a number of factors limited cattle movement in October. But primarily, feedlots continue to face historically high yearling prices and stagnant values for cash market slaughter cattle. The big price spread between feeder and fed cattle chilled interest in adding replacement cattle.

The result is the number of cattle-on-feed for more than 120 days is 22.5 percent above the five-year average.

To date, there seem to be few remedies. According to some analysts, the re-opening of the Japanese market to U.S. beef would help relieve some of the build-up in inventory. Others predict the onset of winter could boost prices in nearby futures contracts.


Tags: agriculture animals beef cattle industry livestock markets meat news USDA