Friday's Cattle on Feed Report shocked the countryside as the report shared an 11% increase (1.89 million head) for July's placements when compared to year-ago levels. Analysts projected the figure to be well above year-ago levels, but an 11% increase wasn't in their scope.
But really, the jump in placements shouldn't come as a bone-chilling discovery as the market has seen lighter placements throughout the entire spring. March's COF report shared that placements were down 8% (1.71 million head), April's placements were down 23% (1.56 million head), May's placements were down 22% (1.43 million head) and June's placements were down 1% (2.04 million head). But come July and August, placements started to increase: July's placements were up 2% (1.80 million head) and August's placements were up 11% (1.89 million head).
As the market enters into the latter half of 2020, it's important we remember that when the historic marketing system is disrupted, cattle still have to work their way through the system, and the rest of the year will be different than anticipated. Before we react to the unexpected 11% increase, we need to step back and ask ourselves if it's appropriate, given the current situation.
From now until the first quarter of 2021, the market will most likely be different than we anticipated. It's vital that the we take out the emotional whiplash out of our response, as a reactionary response always takes our eyes off the end goal and flutters the market into panic.
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ShayLe Stewart can be reached at email@example.com
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