OMAHA (DTN) -- On Friday, USDA is expected to unveil another bearish Cattle on Feed report as the market balances more cattle on feed and more cattle heading into feedlots.
The market's disruption from earlier this spring is still haunting the current cattle market, as are higher input costs from rising corn and hay prices and a lack of marketing options as wheat pastures are hard to come by. Therefore, buyers are pressured to send feeders directly into feedlots as other options are limited this year.
The trend of more cattle on feed and more cattle being placed into feedlots will most likely continue through the end of 2020 and, consequently, make the first and second quarters of 2021 challenging, as the market will have to absorb those market-ready cattle at that point.
On the bullish side for the cattle markets, the U.S. has been seeing strong export demand, which has helped move product and helped keep packers incentivized to keep rigorous kill schedules. But in order to keep the supply chain moving, the U.S. needs to see elevated demand on both the domestic and international sides. The foodservice industry continues to be plagued with the hardship of COVID-19, which gravely affects domestic beef demand.
Friday's Cattle on Feed report will most likely be bearish and could pressure both the live cattle and feeder cattle market.
USDA will release its Oct. 1 Cattle on Feed report at 2 p.m. CDT on Friday.
|USDA Actual||Average Estimate||Range|
|On Feed Oct. 1||103.3%||102.7-103.9%|
|Placed in Sept.||102.5%||98.9-106.5%|
|Marketed in Sept.||105.9%||104.9-106.7%|
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