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Live Cattle: USDA’s survey of feedlots found placements, the number of new calves and feeders entering feedlots, were 9.9% larger than last year in April. This was above the trade’s expectation of a 4.5% increase. Two factors are responsible. Record high cash cattle prices were posted in the first full week of the month. Cattle feeders were bulled up. The second factor was forage quality in the Plains. In the weight breakdown we see that placements of cattle under 600 lbs increased a large 23% over last year. Those light calves and stockers are typically the ones that spend some time on summer pasture before going to the feedlot. With drought conditions damaging forage, and feedlots beckoning with record prices, producers responded. Cattle placed in April finish out from September through November so this would normally be bearish the October. These lighter calves though will not finish out until late November. That could put pressure on the December. With that in mind, we will exit our December/June spreads Monday morning. It came very close to our 12.17 objective today but that looks out of bounds for next week. Marketings: Cattle feeders marketed 2.7% fewer finished cattle in April than the previous year. That was close to expectations and therefore neutral. Keep in mind with one less marketing day in this year’s April offset the marketing number by 3.7%. Putting that back in and it implied unadjusted marketings at 1.0% higher. That fits in with general supply projections. In the coming weeks look for slaughter levels to balloon as much as 6% to 7% larger than last year. That will come as we work off those large placements from back in December. So we have large supplies hitting in a few weeks and will have a little oversupply hitting after summer. Price Impact: Today’s report will not affect our bearish summer expectations. We may have to bring down our bullish expectations for prices in October and December a little. It will not stop the bull rally which will start after this summer though…Rich Nelson Working Trade: Fundamental Support
