Cattle on Feed Report: Bullish

All three categories in USDA's monthly audit of feedlot activity came in on the friendly side of the average pre-report trade guesses, giving the data a bullish read. The combination of slightly lower-than-expected Placements and higher-than-anticipated Marketings produced an On Feed tally that was around 400,000 head fewer than expected.

A weight breakdown of calves placed into feedlots last month shows: lightweight placements down 3.3%; 6-weight placements down 9.5%; 7-weight placements down 3.5%; and heavyweight placements up 9% from year-ago. The data suggests the supply of lighter weight calves in the Southern Plains has dried up after months of actively moving animals off parched pastures and into feedlots. But the flow of heavier calves in other areas of the country continue to move into feedlots at a more brisk pace than year-ago.

With all three of the categories coming in bullish compared to the average pre-report guesses, the data should be supportive for cattle futures Monday, especially if cash cattle trade occurs at prices steady to higher than last week's $128 to $129 trade in the Plains. Once the report data and this week's cash trade is factored into prices, focus will turn to the boxed beef market to see if prices will continue to strengthen.

• Link to report