US cattle on feed increases for first time in 16 months

US cattle on feed finally increased for the time first in 16 months, reflecting optimism on future profits, according to Iowa State University economist Shane Ellis, citing data from a USDA report.

USDA estimated October 1 cattle on feed in feedlots with capacity of 1,000 or more head at 10.5 million head, up one percent from a year ago. Placements in feedlots during September totalled 2.39 million, five-percent above 2008. Marketings of fed cattle during September totalled 1.75 million, four-percent below 2008.

For placements by weight class, more lighter-weight cattle were placed on feed in September than during August, when heavier placements spiked.

The lighter-weight placements reflected this year's good pasture conditions, indicating that calves were held back from feed placement in August and went onto feed in September instead, said Ellis.

He said cheap feeder cattle prices and prospects for a large corn crop also made putting light cattle on feed more attractive to feedlot operators.

Calves being placed now will come to market in April and May 2010, and current feeder cattle and feed grain prices show prospects for making money, he said.

If someone locked in the price of corn and fed cattle futures prices, gross margins can exceed US$150 per head, said Ellis.