Sept. 2020 cattle count

USDA pegged the number of cattle and calves on feed for the slaughter market as of Sept. 1 at 11.39 million head.

That’s 4% higher than a year ago and marks the largest inventory as of that date since the statistical series began in 1996.

Meanwhile, placements in feedlots totaled 2.06 million head during August, up 9% from last year.

“It’s the second month in a row we had somewhat of a surprise as we exceeded expectations on the placement pattern,” said Troy Applehans, CattleFax market specialist. “Obviously, we’ve got a record number of cattle on feed for Sept. 1 since the series began.”

Applehans looks for the placement pattern to continue next month and possibly for the remainder of the year. Placements from June through August were 410,000 head higher than the same time last year, following a million head deficit this past spring.

Weights of August placements remain high as 41% landed in the 800-pound plus category.

“The supply obviously will be larger,” he said. “The fed cattle market could be pressured.”

August marketings came in at 1.89 million head, down 3% from a year ago.

The CattleFax specialist looks for the market to continue to work through the backlog of animals created by previous packing plant shutdowns caused by the coronavirus pandemic.

“The front-end supply continues to improve,” Applehans said. “We are catching up on the backlog of supply.

“Demand has been very good domestically, although we’re still trying to catch up in the food service segment,” he noted. “One thing that is worrisome is the export market hasn’t really lit the world on fire the last couple months. We need exports to pick up. We’re going to have plenty of supply.”

Price discovery reaction

In response to growing concerns about market price transparency amid a recent disconnect between retail beef and cattle prices at the farm level, the National Cattlemen’s Beef Association (NCBA) adopted a new policy at its summer business meeting.

The policy directs NCBA to pursue a voluntary approach to price discovery that includes triggers established by a working group of farmer members. If tripped due to a lack of regionally sufficient negotiated trade, it would prompt NCBA to seek legislative or regulatory solutions.

More recently, the Cattle Market Transparency Act was introduced in the Senate. It seeks to establish a library of cattle contracts and clarification of confidentiality rules to provide crucial data to cattle farmers to help them make informed marketing decisions.

NCBA noted its policy dictates the pursuit of voluntary framework to be developed first, before it supports the Cattle Market Transparency Act or any type of regional mandatory minimums for negotiated trade.